Strenghtening Access to Credit for Micro and Small Business Act of 2025

TWENTIETH CONGRESS OF THE REPUBLIC OF THE PHILIPPINES ) First Regular Session JUL 16 P4:13 RECEI SENATE Senate Bill No. _679 INTRODUCED BY SENATOR CHRISTOPHER LAWRENCE "BONG" T. GO 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 It is the duty of the State to provide and ensure inclusive economic growth by sustaining equal employment opportunities among those who are unemployed or underemployed, establish a rising income generation and provide for a higher standard of living for every Filipino. Mirco and small enterprises play an irreplaceable role in our country's journey towards normalcy and recovery. In its latest record, the Philippine Statistics Authority reported that there are 1,080,810 business enterprises that operate in the country, 99.58% of which are MSMEs and the remaining 0.4% are large business enterprises. This only proves the importance and urgency of creating a sustainable financing program for Micro and Small businesses to make sure that their financial needs are met during these uncertain times.1 The Manila Times https://www.manilatimes.net/2023/06/10/business/top-business/msme-highlights-for-the-half-of- 2023/1895351#:-:text=BASED%20on%20the%20latest%20record,enterprises%20operate%20in%20our%20country.

This bill seeks 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, 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 through a fund which can be easily accesses by beneficiaries. In view of the foregoing, the passage of this bill is earnestly sought. SENATOR CHRISTOPHER LAWRENCE "BONG" T. GO

Coher al TWENTIETH CONGRESS OF THE REPUBLIC OF THE PHILIPPINES 25 JUL 16 P4:13 First Regular Session RECEIVED BY SENATE Senate Bill No. _ INTRODUCED BY SENATOR CHRISTOPHER LAWRENCE "BONG" T. GO PROMOTING ENTREPRENEURSHIP AY 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:

SECTION 1. Short Title. - This Act shall be known as the " Strengthening Access

to Credit for Mirco and Small Businesses Act of 2025."

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, 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 as follows:

(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 are 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 Fund. - There is

hereby created the Pondo sa Pagbabago at Pag-asenso Fund, hereinafter referred to as "the 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 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 17 financial institutions (PFIs) such as rural banks, thrift banks, development banks, 18 cooperative banks, cooperatives, non-stock savings and loan associations, 19 microfinance non-government organizations, or lending companies.

SEC. 5. Lead Implementing Agency. - The SB Corp, the financing arm of the

22 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 Fund; and (b) Lending through accredited PFIs for sixty percent (60%) of the 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 program.

An amount sourced from the accumulated Fund of not more than two percent (2%) 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 Fund, inclusive of the cost of regular plantilla personnel, up to the extent of their involvement in developing and managing the fund loan portfolios.

SEC. 6. Features of the Fund. - The Fund shall have the following features:

(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 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 Fund; (d) There shall be no collateral requirement from the Fund loan beneficiaries; (e) The lender shall only require basic qualifications and requirements to its borrowers, such as the following: 1. At least eighteen (18) years of age; 2. A member in good standing of the duly-registered cooperative or association, or a resident of the local government unit (LGU), from which he/she intends to avail of the loan; 3. Willing to state under oath the facts establishing the foregoing; and 4. Has attended a DTI-accredited livelihood seminar, as evidenced by a certificate of participation, and possesses credit-worthiness, as likewise proven by a certificate issued by the DTI for that purpose. (f) 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 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 Fund.

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 2

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