House OKs bill on sustainable, collateral-free loans to MSEs


A measure seeking to establish a sustainable and collateral-free financing program for the country’s micro and small enterprises (MSEs) was endorsed for Senate approval on Tuesday.

With 278 affirmative votes and without a negative vote, lawmakers from the House of Representatives approved on third and final reading House Bill 7363, or the “Pondo sa Pagbabago at Pag-Asenso Act,” or simply the “P3 Act,” which aims to provide an affordable, accessible, and simple financing program for MSEs, especially those in the poorest populations and underserved areas.

“We believe this measure will greatly help our struggling MSEs still reeling from the effects of the pandemic, which often turn to unscrupulous ‘loan sharks’ who charge excessive interests for loans,” House Speaker Ferdinand Martin G. Romualdez said.

“As MSEs employ millions of Filipinos, they need to grow in numbers to employ more workers. This measure seeks to enhance the entrepreneurial spirit of the Filipinos by taking out two of their worries, which are high-interest rates on MSE loans and putting up collateral for financing,” he added.

HB 7363 mandates the creation of the Pondo sa Pagbabago at Pag-asenso (P3) Fund, “which shall be lent out to qualified MSEs under such terms and conditions that will meet the purposes of this Act.”

The P3 Fund shall be accessible through the Small Business Corporation (SB Corp.) and 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.

The bill said the SB Corp., the financing arm of the Department of Trade and Industry (DTI), shall be the lead implementing agency for the P3 Fund.

According to HB 7363, SB Corp. shall handle the fund delivery to MSEs through direct lending for 40 percent of the P3 Fund; and lending through accredited PFIs for 60 percent 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,” it added.

The main features of the P3 Fund include low-interest rates and no collateral requirements for MSE loans.

“The effective interest rate to be imposed on the loan availed of by the P3 Fund beneficiaries shall not exceed one percent per month for direct lending, and shall not exceed 2.5 percent per month for lending through accredited PFIs,” the measure said.

“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,” it added.