Strengthening SME Development Act

Businesses must be registered with appropriate agencies; micro enterprises need only register with municipal or city treasurer.
Ownership requirements:
- 100% Filipino ownership if single proprietorship or partnership.
- At least 60% Filipino ownership if a juridical entity.
Business sectors covered: industry, services (including professional practice and tourism-related establishments), and agribusiness (excluding farm-level crop production).
SMEs must not be branches, subsidiaries, or divisions of large enterprises, nor controlled by non-owners or non-employees.
SMEs may accept subcontracts from large enterprises and engage in cooperative activities.
Financing programs target SMEs exclusively.
Registered small enterprises are entitled to at least 10% of government procurement contracts, provided competitive pricing and quality.

Minimal regulation and simplified procedural requirements to encourage entrepreneurship.
Encouragement of private sector participation in SME development programs.
Coordination among government agencies, including departments such as Trade and Industry, Agriculture, Labor, Environment, and others, alongside local government units.
Decentralization through regional and provincial offices to enhance service efficiency and greater delegation of authority.

Established to promote the growth and development of SMEs nationwide.
Attached to the Department of Trade and Industry, constituted within 60 days of the Act's approval.
Responsible for coordination, promotion, resource mobilization, and maximizing labor resources.

Chaired by the Secretary of Trade and Industry.
Members include key Cabinet Secretaries, Monetary Board Chairman, chairpersons of relevant financial and SME promotion bodies, and private sector representatives.
Cabinet members may designate undersecretaries or assistants as representatives.
Private sector members receive per diem for meetings.
Initial funding allocated by the Department of Trade and Industry, with future budgets included in its annual appropriation.
Council may invite other government agencies or local associations for participation.
An executive committee may be created for interim decisions.

Acts as the Council's Secretariat.
Functions include preparing SME development plans, coordinating discussions, monitoring policies across government agencies, preparing reports, and performing functions authorized by the Council.

The Council shall review and report on government SME programs and recommend policies.
The President may establish a principal government promotion body for non-financing programs.
This body will be under the policy supervision of the SMED Council and receive no less than 50% of assets and budgets from agencies dissolved and integrated with the Council.

A corporate body to support SMEs globally through financing, technology, production, management, and linkages.
Provides various alternative financing modes excluding crop production financing.
Guarantees loans for qualified SMEs, associations, cooperatives, and NGOs; may guarantee up to 100%.
May provide reinsurance to credit guarantee institutions.
Liable for guarantees upon loan default per contractual terms.
Attached to the Department of Trade and Industry; under policy and administrative supervision of the SMED Council.
Headquartered in Metro Manila with planned provincial branches.
Powers vested in a nine-member Board including private sector and government financial institutions representatives.
Authorized to provide employee benefits like other government financial institutions.

For ten years, lending institutions must allocate at least 6% (micro) and 2% (small and medium) of total loan portfolio to SMEs.
BSP to formulate implementation rules and exclude purchase of government securities from compliance.
Incentives such as reserve requirement reductions to encourage lending beyond mandatory levels.
SMED Council tasked with monitoring loan applications and sector absorptive capacity.
Lending institutions must report quarterly to SMED Council on compliance.

BSP empowered to impose administrative sanctions and fines of not less than ₱500,000 on lending institutions failing to comply.

Invalidity of any Act provision does not affect the remainder, which stays in force.

Laws, orders, regulations conflicting with this Act are repealed or modified accordingly.