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

NINETEENTH CONGRESS
First Regular Session

1141

HOUSE BILL NO.

Introduced by Rep. FAUSTINO ‘INNO’ A. DY V

EXPLANATORY NOTE

Micro, small, and medium enterprises (MSMEs) have a vital role in the
Philippine economy. In 2021, a total of 1,076,122 MSMEs were in operation. This
accounted for 99.58% of all registered businesses in the country which provided
employment to many Filipinos.'

‘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 entrepreneurs keep
their business afloat.

This bill aims to cnsurc 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) Couneil;

* hitps://psa.gouph/press-releases/id/165613


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

¢. 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.

‘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.

a

STINO INNO. DYV


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

NINETEENTH CONGRESS
First Regular Session

1141

HOUSE BILL NO.

Introduced by Rep. FAUSTINO ‘INNO’ A. DY V

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 “S-6" money
lending 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 (PFls) 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 shal! 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 (DT), 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 PFIs.

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;

£ The loanable amount for individual loans shall be set and regularly

reviewed by the Micro, Small and Medium Enterprise Development

(MSMED) Couneil;

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,