Republic of the Philippines
Congress of the Philippines
Metro ManilaTenth Congress
Republic Act No. 8289 May 6, 1997
amending R.A. 6977AN ACT TO STRENGTHEN THE PROMOTION AND DEVELOPMENT OF, AND ASSISTANCE TO SMALL AND MEDIUM SCALE ENTERPRISES, AMENDING FOR THAT PURPOSE REPUBLIC ACT NO. 6977, OTHERWISE KNOWN AS THE "MAGNA CARTA FOR SMALL ENTERPRISES" AND FOR OTHER PURPOSES
Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled::
CHAPTER 1
Section 1. Sec. 3 of Republic Act No. 6977 is hereby amended to read as follows:
"Sec. 3. Small and Medium Enterprise as Beneficiaries. - 'Small and Medium Enterprise' shall be defined as any business activity or enterprise engaged in industry, agribusiness and/or services, whether single proprietorship, cooperative, partnership or corporation whose total assets, inclusive of those arising from loans butt exclusive of the land on which the particular business entity's office, plant and equipment are situated, must have value falling under the following categories:
Micro
... less than
Summary of Republic Act No. 8289 (Amending R.A. 6977)
Definitions and Coverage (Section 1):
- Defines micro, small, and medium enterprises based on asset size:
• Micro: Less than ₱1,500,001
• Small: ₱1,500,001 to ₱15,000,000
• Medium: ₱15,000,001 to ₱60,000,000
- Definitions subject to review and adjustment by the SMED Council.
Eligibility for Government Assistance (Section 2):
• Businesses must be duly registered with appropriate agencies. (Section 4a)
• For micro enterprises, registration with municipal/city treasurer is sufficient. (Section 4a)
• 100% Filipino-owned for single proprietorships/partnerships, or at least 60% Filipino-owned for corporations. (Section 4b)
• Engaged in industry, services, tourism, or agri-business (excluding farm-level agriculture). (Section 4c)
• Not a branch, subsidiary, or division of a large enterprise. (Section 4d)
• Registered small enterprises entitled to 10% of government procurement value annually. (Section 4)
Guiding Principles (Section 3):
• Minimal rules and simplified procedures for registration, financing, and accessing government services. (Section 5a)
• Encouraging private sector participation in SME development programs. (Section 5b)
• Coordination of government efforts across various agencies. (Section 5c)
• Decentralization by establishing regional and provincial offices. (Section 5d)
Small and Medium Enterprise Development (SMED) Council (Sections 4-7):
• Created to promote and develop SMEs, attached to the Department of Trade and Industry. (Section 6)
• Chaired by the Secretary of Trade and Industry, with members from various government agencies and private sector representatives. (Section 7)
• Bureau of Small and Medium Business Development designated as Council Secretariat. (Section 6)
• Mandated to conduct reviews of government SME programs and submit recommendations to Congress and the President. (Section 10)
• Empowered to establish an SME promotion body as the principal agency for non-financing SME programs. (Section 10)
Small Business Guarantee and Finance Corporation (SBGFC) (Section 8):
• Created to provide financing, guarantees, and development initiatives for globally competitive SMEs. (Section 11)
• Attached to the Department of Trade and Industry and under SMED Council supervision. (Section 11a)
• Authorized to guarantee loans up to 100% for qualified SMEs, associations, and cooperatives. (Section 11)
• Board of Directors composed of private sector and government representatives. (Section 11d)
Mandatory Credit Allocation for SMEs (Section 9):
• All lending institutions must allocate at least 6% and 2% of their loan portfolio for small and medium enterprises, respectively, for 10 years. (Section 13)
• Bangko Sentral ng Pilipinas to formulate rules for implementation and establish incentives for lending beyond the mandatory allocation. (Section 13)
• SMED Council to monitor loan applications and absorptive capacity of the SME sector. (Section 13)
• Lending institutions must report compliance to SMED Council quarterly. (Section 13)
Penalties for Non-Compliance (Section 10):
• Bangko Sentral ng Pilipinas to impose administrative sanctions and fines of at least ₱500,000 on non-compliant lending institutions. (Section 14)AIC Grande Tower Garnet Road
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