Sign in Subscribe
Legislative bills

House of Representatives Approves Bill Providing Financing for Distressed Businesses

Strategic Insights

— 2 min read

The House of Representatives has overwhelmingly approved on third and final reading a bill that provides financing for small businesses, especially those crippled by the coronavirus disease-19 (Covid-19) pandemic and other significant economic challenges of national and international scope. The legislation aims to provide financial assistance to distressed enterprises critical to economic recovery through programs and initiatives by the Land Bank of the Philippines (LBP) and the Development Bank of the Philippines (DBP). The assistance is expected to encourage continued operations and maintain employment levels of these businesses.

Key Takeaways:

  • The bill, known as the "Government Financial Institutions Unified Initiatives to Distressed Enterprises for Economic Recovery, or 'Guide,' Act," seeks to provide financial assistance to distressed enterprises through programs and initiatives by the LBP and DBP.
  • The assistance is expected to encourage continued operations and maintain employment levels of these businesses.
  • The bill defines MSMEs as any business activity or enterprise engaged in industry, agribusiness and/or services, with total assets not exceeding P3 million, P3 million to P15 million, and P15 million to P100 million for micro-scale, small-scale, and medium-sized enterprises, respectively.
  • LBP would be mandated to rediscount loans to eligible MSMEs, while DBP's capital stock would be increased from P35 billion to P100 billion.
  • The bill appropriates P10 billion for the expanded lending program, P2.5 billion for DBP and P7.5 billion for LBP.
  • Exemptions would be granted to LBP, DBP, and the special holding company, including exemption from documentary stamp tax, capital gains tax, and other taxes imposed under the National Internal Revenue Code of 1997.
  • A joint congressional oversight committee would be created to oversee the implementation of the bill.
  • Implementing rules and regulations would be issued jointly by the Department of Finance, LBP, DBP, Bureau of Internal Revenue, Bangko Sentral ng Pilipinas, and the Securities and Exchange Commission.

Statistics:

  • 282 votes were given in favor of the bill in the House of Representatives.
  • P10 billion is appropriated for the expanded lending program.
  • P2.5 billion is allocated for DBP, while P7.5 billion is allocated for LBP.
  • DBP's capital stock would be increased from P35 billion to P100 billion.
  • The assets category for micro-scale enterprises is not more than P3 million.
  • The assets category for small-scale businesses is P3 million to P15 million.
  • The assets category for medium-sized enterprises is P15 million to P100 million.

Sources:

  • [House of Representatives approves bill providing financing for distressed businesses](https://www.philstar.com/headlines/2023/02/23/2281588/house-represents-approves-bill-providing-financing-distressed-businesses)
  • [House Bill 1, Guide Act](https://www.congress.gov.ph/legis/bills/25thcongress/bill/enr/HB001.pdf)

Read more