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Republic of the Philippines 
House of Representatives 
Quezon City, Metro Manila 
Twentieth Congress 
First Regular Session 
HOUSE BILL NO. 2978 
Introduced by Representatives Ferdinand Martin G. Romualdez, Yedda 
Marie K. Romualdez, Andrew Julian K. Romualdez and Jude A. Acidre 
AN ACT 
PROMOTING 
ENTREPRENEURSHIP 
BY 
ESTABLISHING 
A 
SUSTAINABLE FINANCING PROGRAM FOR MICRO AND SMALL 
ENTERPRISES THROUGH THE PONDO SA PAGBABAGO AT PAG-
ASENSO PROGRAM, AND APPROPRIATING FUNDS THEREFOR  
EXPLANATORY NOTE 
Micro, small, and medium enterprises (MSMEs) are an essential sector of the 
Philippine economy. Data from the Philippine Statistics Authority show that, as of 
2020, MSMEs comprised 99.51% of all registered business establishments 
nationwide. Among these, micro-enterprises make a substantial contribution to 
employment, generating close to 30% of the country’s total jobs and playing a vital 
role in promoting local economic growth and community-level development. 
Despite their importance, MSMEs, particularly micro-enterprises, continue to 
encounter significant challenges, with limited access to affordable financing being 
among the most pressing. While credit may be technically available, the high interest 
rates often render it unaffordable, making it difficult for these enterprises to remain 
competitive and financially sustainable. In the absence of accessible and fair 
financing options, many small entrepreneurs turn to informal lenders who impose 
excessive interest rates and exploitative terms, leading to cycles of debt and 
economic instability. 
August 4, 2025
5:00 pm


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This bill seeks to institutionalize the Pondo sa Pagbabago at Pag-asenso (P3) 
Program by establishing the P3 Fund, which shall be made available to qualified 
micro and small enterprises under terms and conditions aligned with the objectives 
of this Act. 
The P3 Fund aims to provide an affordable, accessible, and simplified 
financing mechanism for micro and small enterprises, particularly those in 
underserved and low-income areas. It is designed to offer a sustainable alternative 
to informal lending practices, such as the high-interest “5-6” system which many 
micro-entrepreneurs are still forced to rely on. By lowering the cost of borrowing 
and facilitating wider access to formal credit, the P3 Fund will help micro and small 
enterprises sustain their operations, expand their ventures, and contribute more 
effectively to inclusive and sustainable economic growth. 
This measure was also filed during the 19th Congress and was primarily 
referred to the Committee on Micro, Small, and Medium Enterprise Development, 
where it was approved on third and final reading by the House of Representatives. 
In view of the foregoing, approval of this bill is earnestly requested. 
FERDINAND MARTIN G. ROMUALDEZ 
YEDDA MARIE K. ROMUALDEZ 
ANDREW JULIAN K.  ROMUALDEZ 
JUDE A. ACIDRE 


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Republic of the Philippines 
House of Representatives 
Quezon City, Metro Manila 
Twentieth Congress 
First Regular Session 
HOUSE BILL NO. 2978 
Introduced by Representatives Ferdinand Martin G. Romualdez, Yedda 
Marie K. Romualdez, Andrew Julian K. Romualdez and Jude A. Acidre 
AN ACT 
PROMOTING 
ENTREPRENEURSHIP 
BY 
ESTABLISHING 
A 
SUSTAINABLE FINANCING PROGRAM FOR MICRO AND SMALL 
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: 
CHAPTER 1 
GENERAL PROVISIONS 
SECTION 1. Short 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 and small enterprises (MSEs) that facilitate local job creation, 


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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 MSEs, particularly on access 
to financing. 
 
SEC. 3. Objectives. – The objectives of this Act are: 
 
(a) To provide an affordable, accessible, and simple financing program for the 
country’s MSEs, especially those in the poorest populations and underserved 
areas; 
 
(b) To provide a better alternative to informal lenders or the so-called “5-6” 
money lending system availed of by micro enterprises; 
 
(c) To bring down the interest rate at which financial services is made available 
to MSEs; 
 
(d) To boost the development of entrepreneurship and the micro, small and 
medium enterprise (MSME) sector, particularly the MSEs; and 
 
(e) To support the recovery of MSEs from the effects of the COVID-19 pandemic 
lockdown and ensure their viability. 
 
SEC. 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 


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as the “P3 Fund”, which shall be lent out to qualified MSEs under such terms and 
conditions that will meet the purposes of this Act. 
 
The beneficiaries of the P3 Fund shall be the micro and small 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 accessible through the Small Business Corporation (SB 
Corp.) and through accredited partner financial institutions (PFIs) such as rural 
banks, thrift banks, development banks, cooperative banks, cooperatives, 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). 


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SEC. 5. Lead Implementing Agency. – The 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 MSEs through the 
following modes: 
 
(a) Direct lending for forty percent (40%) of the P3 Fund; and 
 
(b) Lending through accredited PFIs for sixty percent (60%) of the P3 Fund. 
 
The SB Corp. shall prioritize lending to underserved and unserved areas and 
MSE segments of the country, subject to the review and approval of the Micro, Small 
and Medium Enterprise Development (MSMED) Council. 
 
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. 
 
An amount sourced from the accumulated P3 Fund of not more than five 
percent (5%) of the total loans disbursed for the period can be used by the SB Corp. 
to support its annual administrative and operating expenses for the P3 Fund, 
inclusive of the cost of regular plantilla personnel, up to the extent of their 
involvement in developing and managing the P3 loan portfolios. 
 
SEC. 6. Features of the P3 Fund. – The P3 Fund shall have the following features: 
 


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(a) The loanable amount for individual loans shall be set and regularly reviewed 
by the MSMED Council; 
 
(b) The effective interest rate to be imposed on the loan availed of by the P3 Fund 
beneficiaries shall not exceed one percent (1%) per month for direct lending, 
and shall not exceed two and a half percent (2.5%) per month for lending 
through accredited PFIs; 
 
(c) 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. It shall be the duty of the lender to collect the loan principal 
and the interest payments from the borrower. 
 
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 quarterly 
report on the status of the P3 Fund. 
 


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SEC. 8. Appropriations. – The initial amount for the implementation of this Act 
shall be charged against the current year’s appropriations of the SB Corp. Thereafter, 
such amount necessary 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, in consultation with the stakeholders concerned, shall 
formulate and promulgate the necessary rules and regulations to implement the 
provisions of this Act. 
 
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. – Section 22 of Republic Act No. 8367, otherwise 
known as the “Revised Non-Stock Savings and Loan Association Act of 1997” 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. 
 
SEC. 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,