Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

EIGHTEENTH CONGRESS
First Regular Session

nouse But wo. 4072

Introduced by Representative Alfred Delos Santos

EXPLANATORY NOTE

One of the challenges faced by micro, small, and medium enterprises (MSMEs)
is the lack of access to capital. Although financial services have been made more
accessible today than they have been in previous decades, the volatility of MSMEs as
a venture has led to a situation where banks are unwilling to lend to MSMEs. Given
the foregoing, these circumstances have led many enterprising Filipinos to avail of the
services of predatory loan sharks or “5-6” as it is commonly referred to: the name of
such practice owes to the high amount of interest offered by said loan sharks.

The Department of Trade and Industry launched the Pondo sa Pagbabago at
Pag-asenso Program (P3 Program) in order to lure small borrowers away from loan
sharks. This DTI program seeks to help underprivileged entrepreneurs and
microenterprises by providing them with low-interest, quick-approval financing with
minimal requirements.

‘The institutionalization of this program would be a dream come true for many
probinsyanos who would want to be entrepreneurs and become businessmen. This
program would also be a step towards poverty alleviation and economic
empowerment, For our society to embrace economic independence amongst its
citizens, it is vital that the State should provide the means for the free development of
each, and the free development of all.

It is for these foregoing premises that the approval of this bill is earnestly
sought.



CeIAUVEUne

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Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

EIGHTEENTH CONGRESS
First Regular Session

4072

HOUSE BILL NO.

Introduced by Representative Alfred Delos Santos

AN ACT
PROVIDING A SOCIALIZED MICROFINANCING PROGRAM FOR MICRO
ENTERPRISES THEREBY PROMOTING ENTREPRENEURSHIP

Be it enacted by the Senate and House of Representatives of the Philippines in
Congress assembled:

SECTION 1. Title. - This Act shall be known as the “Pondo sa Pagbabago at
Pag-asenso Act” or the “P3 Act”.

SEC. 2. Declaration of Policy. - It is the declared policy of the State to foster
national development, promote inclusive growth, and reduce poverty by promoting the
growth of micro enterprises that facilitate local job creation, production and trade in
the country. Towards this end, the State shall develop policies, plans and programs,
and initiate means to encourage entrepreneurial activities, and to ease the constraints
and challenges to micro enterprises, particularly on access to financing.

SEC. 3. Objectives. - The objectives of this Act are as follows:
a. To provide an affordable, accessible and simple micro financing program
for the country’s micro enterprises, especially those in the poorest populations;
b. To provide a better alternative to the informal lenders or the so-called “5-
6” money lending system availed of by micro enterprises; and
c. To bring down the interest rate at which micro finance is made available
to micro enterprises.

SEC. 4. Creation of the Pondo sa Pagbabago at Pag-asenso (P3). ~ There is
hereby created the Pondo sa Pagbabago at Pag-asenso Fund, hereinafter referred to as
the “P3 Fund”, which shall be lent out to qualified micro enterprises under such terms
and conditions that will meet the purposes of this Act.

The beneficiaries of the P3 Fund shall be micro enterprises, as defined under
Republic Act No. 6977, as amended, otherwise known as the “Magna Carta for Micro,
‘Small and Medium Enterprises (MSMEs)”.

The fund shall be primarily accessible through accredited partner financial
institutions (PFIs) such as rural banks, thrift banks, development banks, cooperatives
with license to lend, micro financing institutions (MFls), or lending companies duly
licensed by the Bangko Sentral ng Pilipinas (BSP), Cooperative Development Authority
(CDA), or the Securities and Exchange Commission (SEC).


SEC. 5. Lead Implementing Agency. - The Small Business Corporation (SB
Corp.), the financing arm of the Department of Trade and Industry (DT)), shall be the
lead implementing agency for the P3 Fund. It shall handle the fund delivery to micro
enterprises through the following modes:

a. Direct lending; and
b. Lending through accredited PFls.

To support administrative and operating expenses of the SB Corp., an amount
of not more than five percent (5%) of the total loans disbursed shall be provided
annually to the SB Corp., to be sourced from additional annual allocation.

SEC. 6. Features of the P3 Fund. - The P3 Fund shall have the following
features:

a. The interest rate to be imposed on the loan availed of by the P3 Fund
beneficiaries shall not exceed two and a half percent (2.5%) per month: Provided, That
after three (3) years from the effectivity of this Act, a higher ceiling may be allowed up
to three percent (3%) per month, subject to the review of the Micro, Small And
Medium Enterprise Development (MSMED) Council;

b. The interest earnings shall accrue to the P3 Fund;

c. There shall be no collateral requirement from the P3 Fund loan
beneficiaries; and

d. The loanable amount for individual loans shall be set and regularly
reviewed by the Micro, Small and Medium Enterprise Development (MSMED) Council.

SEC. 7. Policy Oversight Function. ‘The Micro, Small and Medium Enterprise
Development (MSMED) Council shall monitor the utilization and disbursements of the
P3 Fund. It shall submit to the President of the Philippines and to Congress, through
the Congressional Oversight Committee on Micro, Small and Medium Enterprise
Development (COC-MSMED), a yearly report on the status of the P3 Fund.

SEC. 8. Appropriations. — The amount necessary to carry out the provisions of
this Act shall be charged against the appropriations released for the purpose under
the General Appropriations Act for the SB Corp. Thereafter, such sums as may be
necessary for the continued implementation of this Act shall be included in the
annual General Appropriations Act.

SEC. 9. Implementing Rules and Regulations. — Within sixty (60) days from the
approval of this Act, the DTI shall formulate and promulgate the necessary rules and
regulations to implement the provisions of this Act. The implementing rules and
regulations issued pursuant to this section shall take effect thirty (30) days after its
publication in at least two (2) newspapers of general circulation.

SEC. 10. Separability Clause. ~ If any part or section of this Act is declared
unconstitutional, such declaration shall not affect in any manner other parts or
sections hereof.

SEC. 11. Repealing Clause. ~ All laws, decrees, proclamations, issuances, or
ordinances that are contrary to or inconsistent with the provisions of this Act are
hereby amended, repealed or modified accordingly.

SEC. 12. Hffectivity. - This Act shall take effect fifteen (15) days after its
publication in the Official Gazette or in any newspaper of general circulation.


Approved,