Policy and declared constitutional basis
- The State recognizes the role of women in nation building.
- The State ensures the fundamental equality before the law of men and women, consistent with the Philippine Constitution, Article II, Section 14.
- Republic Act No. 7882 seeks to provide all possible assistance to Filipino women in owning, operating, and managing small business enterprises.
Key definitions and rate concepts
- Micro and Cottage Enterprise follow the definition approved by the SMED Council, covering businesses engaged in industry, agri-business, and/or services—whether single proprietorship, cooperative, partnership, or corporation—whose total assets (inclusive of assets arising from loans but exclusive of the land where the office, plant, and equipment are situated) fall within the listed categories.
- Micro means a Micro and Cottage Enterprise with total assets of P150,000.00 and below.
- Cottage means a Micro and Cottage Enterprise with total assets above P150,000.00 - P1,500,000.00.
- Loan Fund refers to 5% of the loan portfolio of all government financing institutions; loans extended to women entrepreneurs within the micro and cottage category are considered with Republic Act No. 7882, and loans under the related small enterprises framework are considered in a reciprocal manner with Republic Act No. 7882.
- Prime Rate is the interest rate imposed by government financial institutions on preferred clients, decided upon among themselves on a weekly basis.
- Government Financial Institutions (GFIs) refer to government banking institutions into direct lending: Philippine National Bank, Land Bank of the Philippines, and Development Bank of the Philippines.
- NGOs are non-stock, non-profit corporations, credit unions, cooperatives, foundations, associations, and civic groups organized purposely to enhance community socio-economic development projects like community organization and lending to income-generating projects.
- Primary Organizations are groups composed of at least four (4) individuals operating or to operate a microenterprise, for purposes such as owning/operating a common business, tapping/supplying a common market, operating a common service facility, tapping common raw material sources, or other beneficial activities.
Who may receive benefits
- Benefits under the program extend to all women who are Filipino citizens.
- Beneficiaries must be at least eighteen (18) years of age, regardless of civil status.
- Coverage particularly includes women who are unemployed, distressed, or whose family income is below the poverty line.
Loan purpose, project types, and eligible borrowers
- The loan must be used for the purchase of basic equipment, tools or materials for manufacturing, processing, trading, and service activities.
- Loan processing may be done at the bank level through NGOs or Primary Organizations that apply for and/or lend to women beneficiaries.
- NGOs/Primary Organizations may either:
- on-lend to women borrowers at a maximum loan amount of P50,000/borrower, or
- set up their own project for the benefit of their women members at a maximum assistance of P50,000/member.
Eligibility requirements and priority rules
- NGO/Primary Organization eligibility requires:
- continuous successful on-lending operations for at least one (1) year,
- registration with the Securities and Exchange Commission, Cooperative Development Authority, or an appropriate agency for legal personality,
- a management board consisting of members of high standing in the local community,
- a proponent counterpart of 10% of the total project cost,
- a permanent office space,
- at least one permanent staff handling the program, preferably a woman,
- annual externally audited financial statements,
- a collection rate of over 80 per cent in previous programs,
- priority for NGOs run by and for women,
- submission in applications of the number of women entrepreneurs as beneficiaries and the loan amount requested; when there is additional funding, submission of a new listing of beneficiaries to the GFI.
- Women entrepreneurs—priority for existing enterprises:
- existing enterprises have priority to obtain a loan not exceeding the value of her business equipment.
- Women entrepreneurs—eligibility for existing enterprises requires:
- engagement for at least one (1) year in any micro or cottage business,
- status as individual/sole proprietorship or partnership,
- either a daily inventory of goods worth not more than P25,000.00 or business equipment with a book value of not more than P50,000.00,
- a good track record in sales.
- Potential women entrepreneur includes:
- those engaged for less than one (1) year and those totally new,
- those whose projects have maximum capitalization of only P25,000,
- those who have undergone training and are certified after training in any government or government-accredited institution.
Project types and loan amount limits
- Projects may be manufacturing, processing, service, or trading.
- Maximum loan amount for NGOs/Primary Organizations is P2,000,000 for relending to women entrepreneurs.
- Maximum loan amount for women entrepreneurs—existing is P50,000/woman member or borrower, but not to exceed the value of her business equipment.
- Maximum loan amount for women entrepreneurs—beginner is P25,000/woman member/borrower.
Interest, collateral, and training requirements
- Interest rate must be the Prime interest rate or 12% per annum, whichever is lower, imposed by GFIs.
- Collateral requirement for women borrowers is a Chattel Mortgage on machineries and equipment of the project.
- Collateral requirement for NGOs/Primary Organizations includes Joint and Several Signatures (JSS) of principal stockholders.
- TESDA training provides basic skills training and upgrading training programs, which may involve training fees.
- Other training agencies with training mandate may conduct training:
- Department of Trade and Industry,
- Department of Labor and Employment,
- Department of Social Welfare and Development,
- UP-Institute for Small Scale Industries,
- Department of Agriculture,
- Department of Science and Technology,
- Technology and Livelihood Resource Center.
- Training certificates for accreditation may come from TESDA and other training institutions accredited by BSMBD.
- GFIs must ensure women entrepreneurs receive certificates upon training completion, and TESDA issues certificates to women borrowers upon completion.
Loan processing steps and required documents
- GFI to NGO/Primary Organization loans are subject to the standard loan systems and procedures/documents of the GFIs.
- GFI to women entrepreneur loans are subject to GFIs’ standard systems and procedures plus these documents:
- if existing: registration with any appropriate government agency,
- if beginner: Certificate of Training from TESDA or any government-accredited training institution,
- Business Plan.
- NGO/Primary Organization to women entrepreneur processing requires:
- the applicant/borrower approaches the NGO/PO in her locality,
- the applicant/borrower fills up and submits an accomplished Application Form plus:
- if existing: registration with any appropriate government agency,
- if beginner: Certificate of Training from TESDA or government-accredited training institution,
- Business Plan,
- NGO/PO staff must visit to validate the application data and evaluate the borrower’s worthiness,
- NGO/PO must confirm and inform the applicant/borrower of approval/disapproval.
- GFI local branch decision timeline: loan applications must be processed and decided within 15 banking days from the date of actual submission of the complete requirements of such loans.
Loan maturity, payments, renewals, and default handling
- Loan maturity must not exceed three (3) years, inclusive of a six months grace period on principal.
- Loan repayments must be made directly to the GFI branch nearest the borrower.
- Repayment may be made in monthly, quarterly, or semi-annual amortization.
- Loan renewals are treated as new applications, and borrowers must restart from step one (1) of the loan processing procedure.
- Only borrowers with up to date payments are entitled to renew loans.
- Defaults:
- A loan may trigger GFI action if there are six or more installment in arrears or if arrearages reach 20% of the total outstanding balance.
- After monitoring and investigation, the GFI may recommend:
- restructure of the loan, or
- declare the loan due and demandable.
- When declaring a loan due and demandable, the GFI must consider:
- diversion of funds, and
- falsification of documents pertaining to the borrower’s identity and financial conditions.
- Demand and legal action procedure:
- the GFI must give 3 written demand letters to the concerned borrower,
- after which, the GFI takes legal action.
- Penalty charges:
- penalty charges equivalent to 12% per annum of the outstanding balance are imposed on default payments accumulated at least two quarterly amortization, computed on a cumulative basis.
- Project viability and foreclosure:
- all remedies must keep the funded project viable,
- for failed projects, foreclosure orders must be initiated upon the instructions/recommendations of the GFI.
Death, prohibitions, and non-discrimination
- If a woman borrower dies or otherwise ceases (“demise”), the two co-makers must be held liable to pay the outstanding balance of the loan at the time of death.
- In such cases, the equipment/machineries/tools purchased may be foreclosed as agreed upon in the chattel mortgage.
- In cases where co-makers cannot be forced to pay, foreclosure of the purchased equipment/machineries must be strictly enforced as agreed in the chattel mortgage.
- Prohibitions include:
- selling, mortgaging, pledging, or otherwise encumbering any equipment, tools, or materials procured through a loan and obtained by virtue of the Act while the loan is not yet fully paid,
- GFIs refusing, denying, or delaying granting loans provided for under the Act without justifiable cause.
Roles, agency duties, and program administration
- The Department of Trade and Industry through the Bureau of Small and Medium Business Development (BSMBD) must:
- formulate the Implementing Rules and Regulations (IRR) and amendments thereto,
- accredit training institutions in coordination with TESDA,
- coordinate the overall implementation of the program,
- participate in information dissemination and promotion of the program.
- DTI Regional Offices must:
- participate in information dissemination and promotion,
- consolidate quarterly reports submitted by Primary Organizations and submit quarterly reports to BSMBD.
- DTI Provincial Offices must:
- participate in information dissemination and promotion,
- coordinate with the local branch of GFIs to monitor the status of availment of NGO/PO borrowers,
- monitor performance of NGOs/POs and women entrepreneurs and determine if the loan benefited the intended women borrowers,
- submit quarterly reports to the Regional Office.
- Government Financial Institutions must provide:
- Head Office functions:
- monitor performance of local branches,
- earmark 5% of total portfolio and make funds available to women borrowers directly or through qualified NGOs,
- facilitate establishment of credit lines with lesser requirements and shorter processing periods,
- Local Branch functions:
- evaluate loan applications of NGO/PO borrowers,
- process and decide within 15 banking days from submission of complete requirements.
- Head Office functions:
- Bangko Sentral ng Pilipinas must check, verify, or audit records of participating GFIs.
- TESDA must:
- organize and conduct appropriate training programs, including skills training, gender sensitivity trainings, and empowering skills such as management techniques, accounting, and budgeting,
- issue certificates to women borrowers upon completion of training.
Monitoring, evaluation, and IRR review
- GFIs must provide BSMBD compliance reports in the format prescribed by BSMBD, including:
- loan releases made to borrowers,
- loan repayments made by borrowers.
- Bangko Sentral ng Pilipinas must check, verify, or audit records of participating GFIs.
- Evaluation must determine the program’s impact, efficiency, and effectiveness.
- Impact may be measured through:
- number of jobs created,
- gross value added,
- number of successful microentrepreneurs assisted,
- investment per job.
- Effectiveness may be measured through:
- funds utilization,
- continuity of microenterprise projects after loan payment,
- meeting objectives.
- Efficiency may be measured through:
- collection/repayment rate,
- cost/benefit ratio.
- The IRR may be reviewed and amended by DTI, in consultation with GFIs and other relevant agencies, as necessary to effectively implement Republic Act No. 7882.
Adoption and formal issuance details
- The order is adopted on 13 Nov. 1995.
- It is signed by R.S. NAVARRO, Secretary of Trade and Industry.