The Department of Trade and Industry seeks the revival of the loan provision under Republic Act No. 9501, or the Magna Carta for Micro, Small and Medium Enterprises.
Trade Secretary Ramon Lopez said the law expired in 2018, but there were efforts to revisit it to beef up the sources of financial assistance for small businesses affected by COVID-19.
“We are working it out in the Senate and House [of Representatives] to have the new Magna Carta approved. This will be another good source of financing for micro SMEs,” Lopez said over the weekend.
He said banks were obliged under the law to extend assistance to MSMEs and were encouraged to create smaller subsidiaries that provide collateral-free loans on top of the banks’ allotment under the magna carta.
Under the law, commercial banks are required to allocate 10 percent of their total loan portfolio for MSMEs which comprise 98 percent of the country’s businesses.