MSME Stimulus Act

Sciate Office of the Secretary TWENTIETH CONGRESS OF THE REPUBLIC OF THE PHILIPPINES AU6 -7 P6:14 First Regular Session RECEIVED BY: SENATE Senate Bill No. 1155 Introduced by Senator JOEL VILLANUEVA AN ACT STIMULATING THE RECOVERY, GROWTH, AND DEVELOPMENT OF THE MICRO, SMALL AND MEDIUM ENTERPRISES FOR JOB GENERATION AND PRESERVATION, APPROPRIATING FUNDS THEREFOR AND FOR OTHER PURPOSES EXPLANATORY NOTE Micro, Small, and Medium Enterprises (MSMEs) are indispensable to the Philippine economy, comprising 99.63% of all registered business establishments and accounting for 66.97% of the Philippines' total employment as of 2023. Of said contribution to employment, micro enterprises produced the biggest share (33.95%) closely followed by small enterprises (26.26%), while medium enterprises lagged behind at (6.77%). 1 MSMEs serve as key drivers of economic activity, job creation, regional development, and innovation. However, despite their economic significance, MSMEs remain among the most vulnerable sectors during periods of crisis and systemic disruption. The COVID-19 pandemic exposed and exacerbated these vulnerabilities. A study conducted by the Asian Development Bank Institute in February 2021 revealed that 61.7% of micro, 49.1% of small, and 35.8% of medium enterprises experienced minimal to zero revenues, leading to temporary closures.? Simultaneously, significant workforce retrenchments occurred across all MSME categories, with 68% of micro, 59.5% of small, and 78.6% of medium enterprises reducing personnel. Department of Trade and Industry. 2023 Philippine MSME Statistics. Available at https://www.dti.gov.ph/resources/msme-statistics/ (Accessed on 7 July 2025). Asian Development Bank. Covid-19 Impact On Micro, Small, and Medium-Sized Enterprises under the Lockdown: Evidence Philippines. Available https://www.adb.org/sites/default/files/publication/677321/adbi-wp1216.pdf (Accessed on 7 July 2025).

Post-pandemic recovery efforts have been further hampered by successive natural calamities and international economic disruptions. These events, coupled with inflationary pressures and rising fuel and commodity prices, have imposed substantial operational costs on MSMEs, thereby threatening their viability and impeding job preservation. In response to these challenges, this bill proposes a comprehensive legislative framework aimed at stimulating the recovery, growth, and long-term development of the MSME sector. The measure seeks to provide interest-free financial assistance and wage subsidies to enable MSMEs to sustain operations, retain employees, and reestablish financial stability. It also provides for the creation of a Contingent Assistance Fund designed to support MSMEs in times of national emergencies, natural disasters, public health crises, and other unforeseen events that pose a risk to business continuity. This measure is anchored on the State policy to promote a self-reliant and independent national economy effectively controlled by Filipinos, as enshrined in

Section 19, Article II of the 1987 Constitution. It likewise affirms the legislative intent

to prioritize MSMEs as a strategic sector in national development planning and economic resilience. In view of the foregoing, the immediate passage of this measure is earnestly sought. JOEL VILLANUEVA P

Scinte /Office of the strettasy TWENTIETH CONGRESS OF THE REPUBLIC OF THE PHILIPPINES 25 AUG - 7 P6:14 First Regular Session ) RECEIVED BY: SENATE Senate Bill No. 1155 Introduced by Senator JOEL VILLANUEVA AN ACT STIMULATING THE RECOVERY, GROWTH, AND DEVELOPMENT OF THE MICRO, SMALL AND MEDIUM ENTERPRISES FOR JOB GENERATION AND PRESERVATION, APPROPRIATING FUNDS THEREFOR AND FOR OTHER PURPOSES Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:

SECTION 1, Short Title. - This Act shall be known as the "MSME Stimulus

Act."

SEC. 2. Declaration of Policy. - The State recognizes that micro, small and

medium enterprises (MSMEs) comprise the most significant number of establishments in the Philippines and are one of the biggest generators of 6 employment in the country. Thus, it is hereby declared the policy of the State to 7 support, strengthen, and facilitate the growth of MSMEs for job generation and 8 long-term development, and help preserve and sustain their operations in times of national emergencies, natural disasters, public health crises, and other unforeseen events that pose a risk to business continuity.

SEC. 3. Coverage. - This Act shall cover all MSMEs in the country affected

by disasters, public health emergencies, war, armed conflict, economic crises, and other related contingencies, such as technological or policy-related disruptions and analogous causes.

SEC. 4. MSME Growth Stimulus Program. - An MSME Growth Stimulus

Program is hereby established to extend assistance, strengthen, and facilitate the growth and development of MSMEs for regional job generation and preservation.

SEC. 5. Modes of Assistance. - The MSME Growth Stimulus Program shall

have the following components, without prejudice to expansion or creation of other 6 modes of assistance: 7 a) Interest Free Loans, The Land Bank of the Philippines (LBP) and the Development Bank of the Philippines (DBP) shall provide an interest-free loan program to qualified MSMEs to support growth assistance, regional job creation and continued business operations (MSME Growth Assistance Program). The MSME Growth Assistance Program shall be subject to the following conditions and such other requirements as may be imposed by the Department of Finance (DOF) and the Bangko Sentral ng Pilipinas: (1) The maximum loanable amount shall be equivalent to one hundred fifty percent (150%) of the MSME's labor and overhead costs for six (6) months; (2) The loan shall be payable within three (3) years; and (3) No collateral shall be required as security for the loan, except if the amount of the loan exceeds Three Million Pesos (P3,000,000.00). Wage Subsidy. The DOF, through the Social Security System (SSS), shall provide a wage subsidy to cover all or a portion of the wages of the employees of qualified MSMEs (MSME Wage Assistance Program). The wage subsidy shall be subject to the following conditions and such other requirements as may be imposed by DOF and SSS, in coordination with the Department of Labor and Employment (DOLE): (1) The wage subsidy shall be based on the regional minimum wage per month, but not to exceed Eight Thousand Pesos (P8,000.00) per employee; (2) The Wage shall only cover rank-and-file employees of qualified MSMEs; and

(3) The term of the subsidy shall be for a maximum period of three (3) months.

SEC. 6. Eligibility Requirements for MSME Growth Stimulus Program.

4 - To be eligible to avail of the benefits under the MSME Growth Stimulus Program, 5 MSMEs must be: 6 a) Duly-registered with the Bureau of Internal Revenue, and no tax-related cases or proceedings are pending against it. For this purpose, a Certificate of Good Standing or such other appropriate proof shall be presented; b) Duly registered with, and compliant with all its obligations under all government social security programs, including, but not limited, to the SSS, Home Development Mutual Fund, and Philippine Health Insurance Corporation; Have no pending labor cases; and d) As a condition for the availment of the benefits of this Act, must commit to maintain its personnel from the time of availment of the benefits under this Act up to twelve (12) months thereafter. During the same period, it shall further commit to refrain from terminating its employees due to authorized causes as provided under Article 283 of the Labor Code of the Philippines, unless in exceptional and meritorious cases as determined by the Secretary of Labor and Employment. Non-compliance with the foregoing conditions shall render any loan obtained under the MSME Growth Stimulus Program to be immediately payable with corresponding legal interest. In the case of wage subsidy, the non-compliant MSME shall immediately refund all benefits received under the Program, with the corresponding legal interest.

SEC. 7. Contingency Fund for MSMEs' Growth Stimulus Program. -

There is hereby established as a special account with the National Treasury, a contingency fund called the MSME Stimulus Contingency Fund for selective implementation in priority job-generating industries' sectors such as agri-food and fishing or areas affected by disasters, public health emergencies, armed conflict, and other related contingencies, such as technological or policy-related disruptions and analogous causes.

SEC. 8. Appropriations. - An amount of One Hundred Billion Pesos

2 (P100,000,000,000.00) shall be appropriated for the initial implementation of this 3 Act, to be divided as follows: 4 a) Forty Billion Pesos (P40,000,000,000.00) for the MSME Growth Assistance Program, which shall be lodged under the budget of the Department of Trade and Industry (DTI); 7 b Forty Billion Pesos (P40,000,000,000.00) for the MSME Wage Assistance Program, which shall be lodged under the budget of DOF; and 9 c) Twenty Billion Pesos (P20,000,000,000.00) for the MSME Stimulus Contingency Fund, which shall be lodged under the budget of DOF. Thereafter, an amount of not less than Twenty Billion Pesos (P20,000,000,000.00) shall be appropriated annually for the implementation of this Act, and augmented by available funds from unprogrammed funds and savings realized by any government agency or instrumentality under the Executive Department.

SEC. 9. Implementing Rules and Regulations. - The DOF, DTI, and

DOLE, upon consultation with appropriate government agencies and other stakeholders, shall promulgate the necessary rules and regulations to implement this Act within sixty (60) days from its effectivity.

SEC. 10. Separability Clause. - If any portion or provision of this Act is

declared unconstitutional, the remainder hereof or any provisions not affected thereby shall remain in force and effect.

SEC. 11. Repealing Clause. - Any law, presidential decree or issuance,

executive order, letter of instruction, rule, or regulation inconsistent with the provisions of this Act is hereby repealed or modified accordingly.

SEC. 12. Effectivity. - This Act shall take effect fifteen (15) days after its

complete publication in the Official Gazette or in a newspaper of general circulation. Approved,