Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Quezon City 
NINETEENTH CONGRESS 
First Regular Session 
HOUSE BILL NO. ____ 
Introduced by HON. LUIS RAYMUND “LRAY” F. VILLAFUERTE, JR. 
EXPLANATORY NOTE 
The magnitude of the economic impact of micro, small, and medium enterprises 
(MSMEs) cannot be denied. Reports indicate that MSMEs are accounted for up to 
99.6 percent of total enterprise and consist of at least 62 percent of the Philippine 
workforce. 
In view of this reality, the government needs to strengthen its efforts in supporting 
MSMEs, especially in the financial aspect. The need for better access to credit is 
indispensable because of the prohibitive costs and interests of the presently available 
financing systems. We need an institutionalized loan program with a simplified 
process that offers low interest that can be readily accessed by ordinary Filipinos. 
This proposed measure provides a program for micro and small enterprises (MSEs) 
where, among other things, the loan requirements are basic, interests are not higher 
than prevailing bank rates, and payment mechanisms are made easier. 
The aim is to increase assistance to financial resources to be able to help businesses 
flourish as well as increase their financial literacy in order to provide a good 
alternative to the usual widespread informal lending practices. 
In view of the foregoing, the approval of this bill is earnestly sought. 
LUIS RAYMUND “LRAY” F. VILLAFUERTE, JR. 
November 10, 2022
2:54 pm
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Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Quezon City 
NINETEENTH CONGRESS 
First Regular Session 
HOUSE BILL NO. ____ 
Introduced by HON. LUIS RAYMUND “LRAY” F. VILLAFUERTE, JR. 
AN ACT 
INSTITUTIONALIZING MICROFINANCE PROGRAMS FOR THE DEVELOPMENT 
OF MICRO AND SMALL ENTERPRISES (MSEs), ALLOCATING FUNDS 
THEREFOR, AND FOR OTHER PURPOSES 
Be it enacted by the Senate and House of Representatives of the Philippines in 
Congress assembled: 
Section 1. Short Title. – This Act shall be known as the "Tulong Puhunan Act." 
Sec. 2. Declaration of Policy. – It shall be the policy of the State to promote genuine 
inclusive growth and alleviate poverty. 
It is likewise the policy of the State to promote a just and dynamic social order that 
shall promote full employment, a rising standard of living and an improved quality of 
life for all. The State also recognizes the indispensable role of the private sector, 
encourages private enterprise, and provides incentives to needed investments. In 
pursuit of this, the State shall develop a program that will ensure that all of its citizens 
can readily access the necessary capital to pursue opportunities and uplift their lives. 
Access to finance and technical support shall be the core policy of this Act. To 
operationalize this policy, it shall be ensured that: 
a) 
The process for obtaining micro-financing, grants and technical support in the
Philippines shall be simple and practical;
b) 
The loan proceeds shall be exclusively used for capital; and 
c) 
Interests shall not be unconscionable and not higher than prevailing bank 
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rates. 
 
Sec. 3. Tulong Puhunan Grant Program. – The Micro, Small and Medium 
Enterprise Development (MSMED) Council, in coordination with the National 
Economic and Development Authority (NEDA), National Anti-Poverty Commission 
(NAPC), the Peoples' Credit and Finance Corporation (PCFC), and the Technical 
Education and Skills Development Authority (TESDA) shall develop a comprehensive 
program for the development of micro and small enterprises (MSEs) in all regions of 
the country. The goal of the program is to protect the capital of small proprietors, 
ensure the success of their MSEs by providing them with assistance and the 
necessary resources in order to help their businesses flourish. 
 
The MSMED Council shall be guided by the following in the development of the 
Tulong Puhunan Grant Program: 
a)  The Program shall be national in scope but shall be tailored to fit the business 
environment, 
market 
demands 
and 
available 
resources 
of 
each 
administrative region; 
b)  The DTI shall create a registry for all MSEs per administrative region based 
on their size category and business area; 
c)  Each region shall choose a maximum of five (5) priority business areas to 
develop in order to reap the benefits of efficiency and specialization; 
d)  Each region is encouraged to choose a diversified priority business portfolio 
in order to minimize risks brought about by natural calamities and changing 
market demands; 
e)  Each region shall also establish a proprietor's guild for each of their priority 
business areas; 
f)  
Free technical and administrative support, including but not limited to product 
development, skills and leadership training, packaging and design, quality 
control, market promotion, client or supplier matching, and financial literacy 
and planning, shall be made available to MSEs falling under the five (5) 
priority business areas in their respective regions; 
g)  Every year, the five (5) top-performing enterprises per size category in each 
region shall be recognized and shall be eligible for grants, not less than ten 
percent (10%) of their current capital, to be used solely for further business 


 
 
capitalization; 
h)  Every micro-sized enterprise that evolves into a small enterprise through the 
help of the Tulong Puhunan Grant Program shall likewise be eligible for a one 
time grant of Five Hundred Thousand Pesos (P500,000) to be used solely for 
further business capitalization;  
i)  
There shall be a mandatory review of the Tulong Puhunan Grant Program 
every three (3) years in order to ensure that the Program meets the present 
market demands. 
 
Sec. 4. Tulong Puhunan Loan Program. – In addition to the Tulong Puhunan Grant 
Program, MSMED Council, in consultation with the NAPC, PCFC, and the Bangko 
Sentral ng Pilipinas (BSP) shall develop a loan program catering exclusively to MSEs 
in need of capital, whether or not they fall under the priority business areas of their 
respective regions. 
 
The MSMED Council shall be guided by the following in the development of the loan 
program: 
a)  Each loan shall not exceed Ten Thousand Pesos (P10,000) for first time 
borrowers; Thirty Thousand Pesos (P30,000) for second time borrowers; and 
Two Hundred and Fifty Thousand Pesos (P250,000) for those borrowing for a 
third time or oftener. Provided, that the MSMED Council is hereby authorized 
to amend these amounts, after the mandatory review provided in this Act, in 
order to meet present market demands; 
b)  Collateral shall not be required from borrowers; 
c)  Loan proceeds shall be exclusively used by the borrower for capital 
expenditures; 
d)  The period for repayment shall be mutually agreed upon by the borrower and 
the lender; Provided, that such repayment period shall be at least three (3) 
months for a first time borrower; at least six (6) months for a second time 
borrower; and at least one (1) year for those borrowing for a third time or 
oftener; 
e)  Delivery of the program shall be through partner lenders which are 
microfinance institutions like cooperatives and/or associations, microfinance 
non-governmental organizations (NGOs), government-owned or -controlled 


 
 
corporations (GOCCs), government financial institutions (GFIs) and banks 
that are registered with the BSP, Cooperative Development Authority (CDA), 
Securities and Exchange Commission (SEC) or the Insurance Commission 
(IC), and the DTI. In the absence of such participating partner lenders in the 
area, government institutions, centers or facilities, which are dedicated to the 
promotion of inclusive growth and anti-poverty objectives, are mandated to 
implement the program; 
f)  
The lenders shall have a collection mechanism, whereby payments are made 
on a weekly or monthly basis;  
g)  Government lenders shall not profit from the microfinance program. Neither 
shall they be entitled to interest proceeds, the amounts of which shall be 
devoted to a fund for the development of MSEs. Participating partner lenders 
in the private sector shall be entitled to a reasonable amount of the proceeds 
of the interest collected by them, as may be determined in rules and 
regulations promulgated in implementation of this Act; 
h)  Priority shall be given to MSEs falling under the priority business areas of 
their respective regions and to MSEs with innovative businesses; 
i)  
This loan program shall be complementary to any existing laws on 
microfinance; and  
j)  
There shall be a mandatory review of the loan program every three (3) years 
in order to ensure that the loan program meets the present market demands. 
 
The penalty rates upon default, dispensation of the loan proceeds, and other details 
and conditionalities of the loan program shall be determined by the MSMED Council. 
 
Sec. 5. Eligibility for Loan Program. – To qualify for the loan program under this Act, 
the borrower must be: 
a)  At least eighteen (18) years of age; 
b)  A member in good standing of a duly-registered cooperative or association, or 
a resident of the local government unit (LGU), from which he/she intends to 
avail of the loan; and 
c)  Has attended a DTI-accredited livelihood seminar, as evidenced by a 
certificate of participation, and possesses credit-worthiness, as likewise 
proven by a certificate issued by the DTI for that purpose. 


 
 
 
Sec. 6. Registration of Microfinance Institutions. – The MSMED Council, through 
the DTI, shall keep a registry of all participating microfinance institutions for 
monitoring purposes. 
 
Sec. 7. Local Government Unit Participation. – Any law, executive order, 
department order, ordinance and the like, to the contrary notwithstanding, LGUs, 
through the local sanggunian, as defined in the 1991 Local Government Code, are 
hereby authorized to provide a loan program in cooperation with the 
cooperatives/associations, NGOs, and peoples' organizations that are lending 
assistance to MSEs within their jurisdiction. 
 
Provided, 
That 
in 
cities 
or 
municipalities 
where 
there 
are 
no 
such 
cooperatives/associations, the LGU shall, within one (1) year from the effectivity of 
this Act, require the municipal/city social welfare and development office or the local 
trade and Industry office or livelihood development office in the city or municipal 
government concerned, to develop and implement a loan program consistent with the 
provisions of this Act, under the supervision of the DTI. 
 
Provided further, That each participating LGU must prepare a comprehensive 
feasibility study for the development of a loan program. Each LGU must fund, from its 
internal revenue allotment, allocate at least Five Million Pesos (P5,000,000), where 
possible and practicable, or Thirty Percent (30%) of the total funding cost related to 
small business improvement, agricultural improvement, institutional advancement 
and consumer protection, whichever is higher. Likewise, for this purpose, the LGU 
shall maintain a separate and dedicated office which shall be responsible for the 
overall implementation of the program in the locality. 
 
Sec. 8. Private Sector Participation and the Matching Fund. – Participating 
cooperatives or associations, and LGUs with loan programs are hereby authorized to 
accept donations from the private sector in order to augment the available funds for 
the loan program. 
 
In order to promote private sector participation in promoting inclusive growth and 


 
 
government poverty alleviation/eradication efforts, donations for purposes of this Act 
from the private sector to an LGU shall be matched with a corresponding amount by 
25 the recipient LGU; Provided, that donations of more than Five Million Pesos 
(P5,000,000) shall be matched by the national government for the LGU. In any case, 
should the LGU concerned be financially incapable of matching a donation, the 
national government shall augment the internal revenue allotment of such LGU for 
this purpose. 
 
Sec. 9. Incentives for Private Support. – Any person or corporate entity may donate 
funds, equipment, materials or services for the improvement of the Tulong Puhunan 
Grant Program and/or Tulong Puhunan Loan Program. Such donations shall be done 
through a memorandum of agreement between the cooperative or association, LGU, 
and the donor. The agreement shall expressly state the value of the donated funds, 
materials, or services, and shall only be used for the Tulong Puhunan Grant Program 
and/or Tulong Puhunan Loan Program. 
 
All income, legacies, gifts, and donations for the benefit of the program shall be 
exempt from the payment of all forms of taxes, fees, assessments, and other charges 
of the government, its branches, and subdivisions. Subject to the issuance of the 
appropriate revenue regulations by the Bureau of Internal Revenue, the value of the 
donation shall also be deductible as an expense in the determination of the taxable 
income of any donor. 
 
Sec. 10. Funding. – The total amount of Ninety Billion Pesos (P90,000,000,000) for 
the next five (5) years upon implementation of this Act or Eighteen Billion Pesos 
(P18,000,000,000) per year for the next five (5) years upon implementation of this Act, 
shall be appropriated for the initial implementation of the Tulong Puhunan Grant 
Program and the Tulong Puhunan Loan Program. Said amount shall at all times be 
divided equitably among each administrative region of the country. Thereafter, such 
sums as may be necessary shall be included in the General Appropriations Act. 
 
In addition, the amount of Five Hundred Million Pesos (P500,000,000) is hereby 
appropriated as a Special Development Fund to generally support the initial 
implementation of this Act. 


 
 
 
The funds shall be held in trust by the DTI in collaboration with the Development Bank 
of the Philippines (DBP), Land Bank of the Philippines (LBP) and other GFIs. The DTI 
may likewise allocate a portion of the funds to the People's Development Trust Fund 
(PDTF) under Republic Act No. 8425 otherwise known as the "An Act 
Institutionalizing the Social Reform and Poverty Alleviation Program, Creating for the 
Purpose the National Anti-Poverty Council, Defining its Powers and Functions, and 
for other Purposes": Provided, that the funds to be allocated to the PDTF shall be 
used solely for microfinance-related organizing activities. 
 
Sec. 11. Primary Implementing Government Agency. – The DTI shall be the lead 
agency, which shall ensure the implementation of this Act. 
 
Sec. 12. Role of Government Financial Institutions. – All GFIs shall set aside 
funding for microfinance operations to complement the purposes of this Act. 
Participating GFIs shall include the DBP, LBP, and other GFIs. 
 
Sec. 13. Reports. – The DTI Secretary shall submit to the President of the 
Philippines, the President of the Senate and the Speaker of the House of 
Representatives, an annual accomplishment report on projects covered in this Act, 
detailing the amount of appropriations released by end of the calendar year, the 
extent of the work accomplished, further work to be done, and any recommendations 
for additional appropriations or charges thereof. 
 
Sec. 14. Full Financial Disclosure, Accountability and Transparency. – The DTI, 
as lead agency of the program, and the LGU concerned shall quarterly publish, print, 
and disseminate at no cost to the public and in an accessible form, in conjunction with 
Republic Act No. 9485, otherwise known as the "Anti-Red Tape Act of 2007", and 
through their websites, timely, true, accurate, and updated key information relating to 
the program. Likewise, they shall endeavor to translate key information and present 
them in popular form and means. 
 
Sec. 15. Implementing Rules and Regulations. – The DTI, in consultation with 
relevant government agencies, shall prepare such rules and regulations for the 


 
 
proper and effective implementation of this Act, within sixty (60) days from the date of 
publication. The DTI shall publish such rules and regulations once a week for two (2) 
consecutive weeks in two newspapers of general circulation. 
 
Sec. 16. Separability Clause. – If any provision of this Act is declared 
unconstitutional, the same shall not affect the validity and effectivity of the other 
provisions hereof. 
 
Sec. 17. Repealing Clause. – All laws, decrees, orders, issuances or portion thereof, 
which are inconsistent with the provisions of this Act are hereby repealed or modified 
accordingly. 
 
Sec. 18. Effectivity. – This Act shall take effect fifteen (15) days after its publication in 
two (2) newspapers of general circulation. 
 
Approved,