Magna Carta for small
businesses signed into law

PRESIDENT Arroyo yesterday signed into law the Magna Carta for Micro, Small and Medium Entrepreneurs (MSMEs) or Republic Act 9501, which seeks to strengthen financial support to small businesses by addressing the problem of lack of capital and access to credit.

The new law is part of the priority legislative agenda crafted by the Legislative Executive Development Advisory Council (LEDAC) for the remaining session days of Congress.

RA 9501 requires banks and lending institutions to allocate at least eight percent of their loan portfolio to micro and small enterprises. The present law requires only a six percent minimum allocation for micro and small enterprises and a minimum of two percent for medium enterprises.

It also adjusted the definition of MSMEs.

Firms will now be considered as micro enterprises when they have total assets of not more than P3 million, from the previous threshold amount of P1.5 million. Small enterprises will be those with total assets of P3 million to not more than P15 million. Medium enterprises are those with total assets of P15 million to P100 million, from the previous threshold amount of P60 million.

The new law increased the capital stock of the Small Business Corp., the government agency created to help MSMEs, to P10 billion.

RA 9501 also requires government to provide adequate support to MSMEs through effective credit facilities that do away with burdensome collateral requirements, access to new technologies and regular entrepreneurship training programs for workers and a comprehensive development plan that would ensure the viability and growth of small and medium businesses in the country.

Opposition Sen. Loren Legarda, who headed the Senate panel in the bicameral committee, said MSMEs make up 99 percent of economic activity, with micro enterprises comprising 92 percent.