Republic of the Philippines
HOUSE OF REPRESENTATIVES
Constitution Hills, Quezon City

TWENTIETH CONGRESS
First Regular Session

3548

HOUSE BILL NO.

Introduced by Rep. FAUSTINO ‘BOJIE’ G. DY IIT

EXPLANATORY NOTE

Micro, small, and medium enterprises (MSMEs) play a vital role in the
Philippine economy. In 2023, a total of 1,241,733 MSMEs were in operation. This
accounted for 99.63 percent of all registered businesses in the country which provided
employment to many Filipi

A major problem faced by MSMEs is access to financing. MSMEs find it
difficult to avail of loans from formal lending institutions such as banks, cooperatives
or micro-finance institutions due to high interest rates and stringent documentary
requirements. In 2017, the government launched the Pondo sa Pagbabago at
Pag-asenso (P3) Program to help address this problem. The program assisted micro
entrepreneurs by providing them access to affordable and cost-efficient microloans.
During the COVID-19 pandemic, the P3 Program has also helped many micro
entreprencurs keep their business afloat.

This bill aims to ensure the sustained implementation of this program so that
more micro entrepreneurs would benefit.

Under this measure, the Pondo sa Pagbabago at Pag-asenso (P3) Fund shall be
created which shall be lent out to qualified 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 P3 Fund shall have the following features:
a. The loanable amount for individual loans shall be set and regularly

reviewed by the Micro, Small and Medium Enterprise Development
(MSMED) Council;

“https:Jwww.dti.gov. ph/resources/msme-stalistics/


b. The allowable interest rate, which includes service fee and other
charges, shall not exceed twelve percent (12%) per annum.

. The interest earnings shall accrue to the P3 Fund;

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

e. The lenders shall have a collection mechanism, whereby payments are
made on a daily, weekly, or monthly basis, or depending on the
livelihood project income cycle.

e

The amount necessary for the implementation of the P3 Fund shall be included
in the annual General Appropriations Act.

In view of the foregoing, the immediate passage of this bill is earnestly sought.

FAUST OIE’ G. DY IT


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Constitution Hills, Quezon City

TWENTIETH CONGRESS
First Regular Session

3548

HOUSE BILL N

Introduced by Rep. FAUSTINO ‘BOJIE’ G. DY II

AN ACT
PROMOTING ENTREPRENEURSHIP BY ESTABLISHING A SOCIALIZED
MICRO FINANCING PROGRAM FOR MICRO ENTERPRISES THROUGH
THE PONDO SA PAGBABAGO AT PAG-ASENSO PROGRAM, AND
APPROPRIATING FUNDS THEREFOR

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
Pagasenso Act” or the “P3 Act”.

SECTION 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.

SECTION 3. Objectives. - The objectives of this Act are:

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 informal lenders or the so-called “5-6” money
ending system availed of by micro enterprises;

c. To bring down the interest rate at which micro finance is made available to
micro enterprises; and

d. To boost the development of entrepreneurship and the micro, small and
medium enterprise (MSME) sector, particularly the micro enterprises.

SECTION 4. Creation of the Pondo sa Pagbabago at Pag-asenso (P3) Fund. —
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 the 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, non-stock savings and loan
associations, microfinance non-government organizations, or lending companies.

For efficient implementation and operation, cooperatives except cooperative
banks and insurance cooperatives shall be under the sole supervision and examination
of the Cooperative Development Authority (CDA); all other financial entities,
corporations and financial intermediaries, such as non-government organizations,
financing companies, non-stock savings and loan associations, microfinance
non-government organizations, and lending investors shall be under the Securities and
Exchange Commission (SEC); banks shall be under the Bangko Sentral ng Pilipinas
(BSP); and insurance companies shall be under the Insurance Commission (IC).

Cooperative banks shall be under the supervision and examination of the CDA
and BSP; while insurance cooperatives shall be under the supervision and examination
of the CDA and Insurance Commission (IC).

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

a. Direct lending; and

b. Lending through accredited PFls.

With the goal to achieve greater outreach to all provinces and barangays of the
country, financial technology-enabled systems and processes can be utilized in the
implementation of the P3 program. To support annual administrative and operating
expenses of the SB Corp., an amount of not more than five percent (5%) of the total
loans disbursed can be used by the Corporation.

SECTION 6. Features of the P3 Fund. — The P3 Fund shall have the following
features;

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

g. The allowable interest rate, which includes service fee and other
charges, shall not exceed twelve percent (12%) per annum. Reasonable
and actual cost of collection may be allowed upon proper justification;

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

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

j. The lenders shall have a collection mechanism, whereby payments are


made on a daily, weekly, or monthly basis, or depending on the
livelihood project income cycle. It shall be the duty of the lender to
collect the loan principal and the interest payments from the borrower.

SECTION 7. Policy Oversight Function, — The 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.

SECTION 8. Appropriations. — The initial amount for the implementation of this
Act shall be charged against the current year’s appropriations of the Small Business
Corporation. Thereafter, such amount necessary shall be included in the annual
General Appropriations Act.

SECTION 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.

SECTION 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.

SECTION 11. Repealing Clause. — Section 22 of Republic Act No. 8367 is hereby
repealed. 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.

SECTION 12. Effectivity. — This Act shall take effect fifteen (15) days after its
publication in the Official Gazette or in a newspaper of general circulation.

Approved,