Rationalization of Existing Small and Medium Enterprise Programs and Agencies.
SEC. 10. Rationalization of Existing Small and Medium Enterprise Programs and Agencies. - The Small and Medium Enterprise Development Council shall within one hundred eighty (180) days from its establishment, recommend to the President, measure/s to rationalize and integrate under a unified institutional framework all government programs for the promotion and development of small and medium enterprises.
The President is hereby also empowered to establish a small and medium enterprise promotion body which shall be the principal government agency that will formulate, implement, coordinate and monitor all non-financing government programs, including fee-based services, to support and promote micro, small and medium enterprises. It shall be attached to the Department of Trade and Industry and shall be under the policy, program and administrative supervision of the SMED Council. The said office shall receive no less than fifty percent (50%) of the assets, and budgetary allocations of the agencies for promotion, development and financing of small and medium enterprises that may be henceforth dissolved and/or abolished and absorbed, incorporated and integrated into the SMED Council.
Creation of Small Business Guarantee and Finance Corporation.
SEC. 11. Creation of Small Business Guarantee and Finance Corporation. - There is hereby created a body corporate to be known as the Small Business Guarantee and Finance Corporation, hereinafter referred to as SBGFC, which shall provide, promote, develop and widen in both scope and service reach various alternative modes of financing for small enterprises, including, but not limited to, direct and indirect project lending, venture capital, financial leasing, secondary mortgage and/or rediscounting of loan papers to small businesses, secondary/regional stock markets: Provided, That crop production financing shall not be serviced by the Corporation.
The Corporation shall guarantee loans obtained by qualified small enterprises, local and/or regional associations small enterprises and industries, private voluntary organizations and/or cooperatives, under such terms and conditions adopted by its Board. It may guarantee loans up to one hundred percent (100%). It may also provide second level guarantee (i.e., re-insurance) on the credit and/or investment guarantees made by credit guarantee associations and other institutions in support of small entrepreneurs.
The Corporation shall become liable under its guarantees upon proof that the loan has become past due under such terms and guidelines adopted by its Board and printed on the contract of guarantee.
The Small Business Guarantee and Finance Corporation shall:
be attached to the Department of Trade and Industry and shall be under the policy, program and administrative supervision of the SMED Council;
have its principal place of business in Metro Manila and endeavor to have one or more branch offices in every province of the country;
exercise all the general powers conferred by law upon corporations under the Corporation Code as are incidental or conducive to the attainment of the objectives of this Act; and
have a board of directors upon which the powers of the Corporation shall be vested, to be composed of five (5) members including :
three (3) members from the private sector appointed by the, President upon recommendation of the SMED Council and from among whom the Chairman of the Board shall be appointed by the President to serve on a full-time basis;
the Secretary of Trade and Industry or his Undersecretary; and
a representative of the five (5) government financial institutions mandated in this Act to provide the initial capital of the Corporation, who shall be designated, under guidelines agreed upon by the Board Chairmen of said institutions.
Capitalization and Funding.
SEC. 12. Capitalization and Funding. - The Small Business Guarantee and Finance Corporation shall have an authorized capital stock of Five billion pesos (P5,000,000,000.00). The initial capital of One billion pesos (P1,000,000,000.00) shall be established from a pool of funds to be contributed in the form of equity investments in common stocks by the Land Bank of the Philippines (LBP), the Philippine National Bank (PNB), the Development Bank of the Philippines (DBP) in the amount of Two hundred million pesos (P200,000,000.00) each. The Social Security System (SSS) and the Government Service Insurance System (GSIS) shall also set aside Two hundred million pesos (P200,000,000.00) each to be placed in preferred stocks of the SBGFC. Additional funding shall come from trust placements of excess and unused funds of existing government agencies, bilateral and multilateral official development assistance funds, subscriptions from government-owned or controlled corporations, and investments of private financial institutions and corporations.
Mandatory Allocation of Credit Resources to Small Enterprises.
SEC. 13. Mandatory Allocation of Credit Resources to Small Enterprises. - All lending institutions as defined under Central Bank rules, whether public or private, shall, set aside a portion of their total loan portfolio based on their balance sheets as of the end of the previous quarter, and make it available for small enterprise credit as herein contemplated. The portion mandated to be so set aside shall at least be five (5%) by the end of the first year of the effectivity of this Act, ten percent (101%) by the end of the second year through t e end of the fifth year, and five percent (5%) by the end of sixth year and may come down to zero by the end of the seventh year.
The Central Bank in consultation with the Council, shall formulate rules for the effective implementation of this provision: Provided, That the purchase of government notes, securities, and other negotiable instruments, with the exception of such instruments as maybe offered by the SBGFC, shall not be deemed compliance with the foregoing provision.
The SMED Council shall set up the appropriate systems to monitor all loan applications of small enterprises in order to account for the absorptive capacity of the small enterprise sector.
The Central Bank shall furnish to the Small and Medium Development Council on a semestral basis regular reports on the lending institutions' compliance with the above provisions on the mandatory credit allocation for small enterprises.
SEC. 14. Penal Clause. The Central Bank shall impose administrative sanctions and other penalties on the lending institutions for non-compliance with provisions of this Act. In addition, the president, members of boards of directors, and other officers of the erring lending institutions shall be individually liable for imprisonment of not less than six (6) months and a fine of not less than Five hundred thousand pesos (P500,000.00) each.
Source: Official Gazette of the Republic of the Philippines — Philippine laws are public documents (works of the government).
