Good news for micro-entrepreneurs and business startups! A bill aiming to boost financing for lenders and assist micro, small, and medium enterprises (MSMEs) has just been filed at the 19th Congress.
House Bill No. 1 or “An Act providing for government financial institutions unified initiatives to distressed enterprises for economic recovery (GUIDE)” was filed by Congressman Ferdinand Martin Romualdez, the first cousin of President Ferdinand “Bongbong” Marcos Jr. who is also the presumptive House Speaker. The measure was co-authored by presidential son and Ilocos Norte Representative Ferdinand Alexander “Sandro” Marcos, and Representatives Jude Acidre and Yedda Marie Romualdez of the Tingog Party-list.
Under the bill, the government will be allocating P10 billion in total financing for state-run lenders DBP and LandBank to help affected MSMEs engaged in agriculture, infrastructure, manufacturing, and service industries. Of this amount, P7.5 billion will go to LandBank of the Philippines (LANDBANK ) while another P2.5 billion will go to the Development Bank of the Philippines (DBP).
A special holding company will also be established that would serve as a major player in financial and capital markets. It will provide assistance to firms who have solvency or liquidity issues and will focus on helping “other strategically important companies (SICs)” heavily affected by the COVID-19 pandemic.
These SICs would include companies in construction, education, food production, health care, socialized housing, power & energy, product distribution, retailing, services, tourism and hospitality, transportation and logistics, as well as water and sanitation.
Providing the needed assistance to MSMEs
“The proposed legislative measure seeks to strengthen the capacity of the Land Bank of the Philippines and the Development Bank of the Philippines to provide the needed assistance to MSMEs, and other strategically important companies. To this end, the government financial institutions are mandated to expand their credit programs in order to assist MSMEs to meet their liquidity needs,” the explanatory note read.
Micro-enterprises are defined as those with total assets worth less than P50,000; cottage enterprises are those with assets worth P50,001 to P500,000; small businesses have assets worth P500,001 to P5 million; medium-scale enterprises have over P5 million to P20 million.
Just last May, the LANDBANK launched a P50-B loan program meant for businesses hit by natural and man-made calamities, such as the ongoing conflict between Russia and Ukraine. The bank is mandated to promote countryside development while remaining financially viable. It is also authorized to implement the Comprehensive Agrarian Reform Program (CARP), assist small farmers and fisherfolks, and serve as the official depository of government funds.
Meanwhile, the DBP is mandated to provide banking services that principally cater to the medium and long-term needs of agricultural and industrial enterprises, focusing on small and medium-scale industries.
“In particular, the LANDBANK and DBP were mandated to expand their credit and rediscounting facilities to affected MSMEs in the agriculture, infrastructure, manufacturing, and service industries,” the GUIDE Bill read.
GUIDE also calls for the increase in the capital stock of DBP from P35 billion to P100 billion, which will be divided into one billion shares priced at P100 per piece.
A similar measure was introduced by Quirino Representative Junie Cua in the 18th Congress, but it failed to pass through the Senate.