EIGHTEENTH CONGRESS OF THE 
)
REPUBLIC OF THE PHILIPPINES 
)
First Regular Session 
)
S E N A T E  
S. No. 
35
O  o f THE
^ECEIVE^i
- 1 201^ !
llU
\t/> TIME: 
BY:
m;
BILLS
)EX
Introduced by Senator Aquilino “Koko” Pimentel HI
AN ACT
PROVIDING A SOCIALIZED iMICROFINANClNG PROGRAM 
FOR MICRO ENTERPRISES THEREBY PROMOTING
ENTREPRENEURSHIP
EXPLANATORY NOTE
President Duterte issued a directive to replace the "5-6’' money- 
lending scheme, the term used for loans sought from informal lenders. 
"5-6" money-lenders typically charge at least 20% monthly interest rate, 
way higher than the rates from formal financing and credit programs, 
but micro enterprises choose to borrow from them because of the 
voluminous and stringent documentary requirements and the need for 
collaterals when borrowing from the formal sector like micro finance 
institutions and banks.
The "5-6" system is a PhP30 billion-industry. Thus, to be able to 
compete with the "5-6" money-lenders, the amount of PhPl Billion was 
appropriated in 2017 and 2018, and PhPl.5 Billion in the 2019 General 
Appropriations Act for the Pondo sa Pagbabago at Pag-asenso (P3) 
Program of the Small Business Corporation (SB Corp.), an attached 
agency of the Department of Trade and Industry (DTI).
The P3 Program aims to encourage micro enteiprises to avoid 
informal sources of lending by making financing more accessible and 
providing them loans with lower interest rates and without collateral


requirement. The demand and need for the P3 Program can be inferred 
from the utilization of the credit line from the P3 Fund. As of May 2019, 
SB Corp. has approved PhP3.249 Billion in credit lines of which PhP 
2.448 Billion have been released to P3 partner financial institutions
This bill proposes to institutionalize the P3 Program of the SB Corp. 
to provide micro enterprises a cheaper source of financing thereby 
addressing the financing concerns of micro entrepreneurs throughout 
the country, especially those in the poorest provinces.
In view of the foregoing, the immediate passage of this bill is 
earnestly sought.
A?-
AQUILINO “ 1KOKO” PIMENTEL III


EIGHTEENTH CONGRESS OF THE 
) 
REPUBLIC OF THE PHILIPPINES 
)
First Regular Session 
)
S E N A T E  
S. No.
Sb
*VHE
THE
RECEIVED
Ig p/iHlI - 1  20tS
\t/)  TIME: 3'-ar
BY:
rr;
BILLS & III
Introduced by Senator Aquilino “Koko” Pimentel HI
AN ACT PROVIDING A SOCIALIZED MICROFINANCING 
PROGRAM FOR MICRO ENTERPRISES THEREBY 
PROMOTING ENTREPRENEURSHIP
9
10
11
12
13
14
15
16
17
18
19
20 
21
Be it enacted by the Senate and House of Representatives of the Philippines in 
Congress assembled:
SECTION I. Title -  This Act shall be known as the ""Pondo sa 
Paghabago at Pag-asenso” or the 
AcF.
SEC. 2. Declaration of Policy. -  It is a 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 enteiprises, 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


2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
1
(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 made available 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, or the “Magna Carta 
for Micro, Small and Medium Enterprises (MSMEs).”
The P3 Fund shall be primarily accessible through accredited 
partner financial institutions (PFIs) such as rural banks, cooperatives with 
license to lend, micro financing institutions, 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 ann of the Department of Trade 
and Industry (DTI), 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 PFIs.
To support administrative and operating expenses of the SB Corp., 
an amount not more than five percent (5%) of the total loans disbursed 
shall be provided annually to the SB Corp., to be sourced from the 
additional annual allocation under the General Appropriations Act 
(GAA).
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 2.5% per month; 
Provided, that after three (3) years from the effect!vity of this 
Act, a higher ceiling may be allowed up to 3% per month,


2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
1
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 MSMED Council.
SEC.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.
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 GAA for the SB Corp. Thereafter, sueh sums as 
may be necessary for the continued implementation of this Act shall be 
included in the annual GAA.
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 
the 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.


2
3
4
1
SEC. 12. Effectivity. -  This Act shall take effect fifteen (15) days 
after its publication in the Official Gazette or in any newspaper of general 
circulation.
Approved,