Frequently Asked Questions

The Bangko Sentral ng Pilipinas (BSP) issued on 11 March 2003, Circular No. 374, s2003, Implementing Rules and Regulations of Section 9 (Credit Delivery) of RA No. 9178. The guidelines provide instructions for the government financial institutions to set up the special credit window that will service the credit needs of BMBEs either through retail or wholesale lending.

However, it was gathered from the briefing sessions conducted by DTI regional offices that the special credit window for BMBEs is not available in their areas. The GFIs also took the option of wholesaling their funds to financial institutions (FIs) like rural banks. This apparently makes the BMBE facility, wholesaled to FIs, still not accessible to the micro enterprises, since FIs apply the usual procedures and interest charges to BMBEs.

1.    Two (2) copies of BMBE application form with photocopy
2.    Business Name certificate with photocopy
3.    Valid ID with photocopy
4.    Annual Income Tax with photocopy

The agencies concerned are the following:
-    Department of Trade and Industry (DTI)

-    Department of Science and Technology (DOST)

-    University of the Philippines Institute for Small Scale

-    Industries (UP-ISSI)

-    Cooperative Development Authority (CDA)

-    Technical Education and Skills Development Authority (TESDA)

-    Technology Resources Center (TRC)

The BMBE shall report to the DTI through the Negosyo Center of any change in the status of its ownership structure and shall surrender the original copy of the BMBE Certificate of Authority for notation.

The following government financial institutions will provide a special credit window for BMBEs:
-    Land Bank of the Philippines;

-    Development Bank of the Philippines;

-    Small Business Guarantee and Finance Corporation;

-    People’s Credit and Finance Corporation;

-    Quedan and Rural Credit Guarantee Corporation;

-    Government Service Insurance System (for members only); and

-    Social Security System (for members only)

Only registered BMBEs may take advantage of the credit facility and other benefits granted under the law. This means that the enterprise must first have a Certificate of Authority which authorizes it to operate as a BMBE.

Based on the revised guidelines issued by the DTI under DTI DAO No. 16-01, Series of 2016, any person, natural or juridical, such as partnership, corporation, association and cooperative, having the qualifications and none of the disqualifications shall be eligible to register as BMBEs.

A person applying to be registered as a BMBE shall meet the following qualifications:
1.  With an asset of not more than Three Million PESOS (Php3,000,000.00) excluding land;

2. Engaged in the production, processing or manufacturing of products or commodities, including agro-processing, trading, and services;

3. Registered with the Department of Trade and Industry for sole proprietorships; for juridical persons: with the Securities and Exchange Commission (SEC), for corporations, partnerships, and associations; and with the Cooperative Development Authority for cooperatives.

However, entities rendering services in connection with the exercise of one’s profession by a person duly licensed by the government after having passed a government licensure examination are disqualified from applying for BMBE Certificate of Authority.

Applications for BMBE Certificate of Authority shall be filed with the Negosyo Centers established in each province, city, or municipality, or in the DTI offices where Negosyo Centers have not been set up.

The following shall be submitted in support of the duly filled-up BMBE application form:
1.    Certificate of Business Name Registration from the Department of Trade and Industry (DTI), or

2.    Certificate of Registration from the Securities and Exchange Commission (SEC), or

3.    Certificate of Registration from the Cooperative Development Authority (CDA).

The applicant shall follow the steps herein enumerated in applying for BMBE Certificate of Authority (CA):
1.    Accomplish and file the application form for BMBE Certificate of Authority;

2.    The DTI, through the Negosyo Center, evaluates the application for purposes of determining the eligibility and qualifications as a BMBE;

3.    The DTI, after finding the applicant to be eligible and qualified, issues the BMBE Certificate of Authority within fifteen (15) working days from receipt of application with complete requirements; otherwise, the BMBE Certificate of Authority shall be deemed approved (where in such cases it becomes ministerial on the part of DTI to issue the BMBE Certificate of Authority).

The BMBE Certificate of Authority (CA) shall be effective for a period of two (2) years commencing from the date of issuance. The CA may be renewed for the same period of two (2) years and every two (2) years thereafter subject to the applicant’s continued compliance with the eligibility requirements prescribed by law and DTI DAO No. 16-01 Series of 2016.

The registration and issuance of the CA shall be free of charge.

Once a BMBE is registered and issued with a Certificate of, it is automatically exempt from the minimum wage law.

Existing employees shall continue to receive their wages, allowances, and other benefits. On the other hand, wages of employees hired by BMBEs after the latter’s registration shall be exempted from the coverage of the minimum wage law. BMBE workers shall continue to be covered by applicable labor laws and regulations, including the non-diminution rule on existing wages and benefits.

Yes. The rule is that laws shall have prospective application only. Thus, an enterprise’s exemption from the coverage of the minimum wage law can only be applied to employees hired after its registration as a BMBE

It depends between the employer and the worker. They shall mutually agree on the acceptable wage rate.

The BMBE registers with the BIR Revenue District Office (RDO) where the principal office or place of business is located and its submission of the necessary documents.

The “BMBEs Act of 2002” encourages the formation and growth of barangay micro business enterprises by granting them incentives and other benefits.

A BMBE is defined as any business enterprises engaged in production, processing, or manufacturing of products, including agro- processing, as well as trading and services, with total assets of not more than P3 million. Such assets shall include those arising from loans but not the land on which the plant and equipment are located.

For the purpose of the Act, “services” shall exclude those rendered by any one, who is duly licensed by the government after having passed a government licensure examination, in connection with the exercise of one’s profession (e.g. Account, Lawyer, Doctor, etc.)

1.    Copy of the BMBE’s Certificate of Authority
2.    Sworn Statement of Assets of the BMBE and/or its affiliates, supported by pertinent documents

3.    Certified list of branches, sales outlets, places of production, warehouses and storage facilities

4.    Certified list of affiliates

5.    Latest audited Financial Statement or Account Information Form or its equivalent
 

BMBEs are essential to the country’s economic development since they effectively serve as seedbeds of Filipino entrepreneurial talent. Thus, the Act primarily aims to integrate micro enterprises in the informal sector into the mainstream of the economy. Strengthening BMBEs would mean more jobs and livelihood, and a better quality of life for Filipinos.

In lieu of an income tax return, an income tax exempt BMBE is required to submit an Annual Information Return. This is filed on or before the 15th day of the 4th month after the close of the taxable year with an Account Information Form, which contains data from its financial statement and Sworn Statements of Assets Owned and /or used.

Registered BMBEs can avail of the following incentives:
-    Income tax exemption from income arising from the operations of the enterprise;

-    Exemption from the coverage of the Minimum Wage Law (BMBE employees will still receive the same social security and health care benefits as other employees);

-    Priority to a special credit window set up specifically for the financing requirements of BMBEs; and
-    Technology transfer, production and management training, and marketing assistance programs for BMBE beneficiaries.

The LGUs are also encouraged to either reduce the amount of local taxes, fees, and charges imposed or exempt the BMBEs from local taxes, fees, and charges.

No. The income tax exemption privilege of a BMBE may be revoked for any of the following reasons:
1.    Transfer of place of business;

2.    Value of its total assets exceeds P3 million;

3.    Voluntary surrender of the Certificate of Authority;

4.    Death of the registered individual owner of the BMBE; violation or non-compliance with the provisions of R.A. 9178

5.    Merger or consolidation with an entity which is not eligible to be a BMBE;

6.    Sale or transfer of the BMBE, if it is sole proprietorship without prejudice to the transferee applying for registration;

7.    Submission of fake or falsified documents;

8.    Retirement from business, or cessation/suspension of operations for one year; and

9.    Making false or omitting required declaration or statements

The MSMED Council may be contacted through the Bureau of SME Development (BMSMED). The BSMED serves as the secretariat of the council.

Yes. Regional and Provincial MSMED Councils are present nationwide. To contract the local MSMED Council, call or visit the nearest DTI-Regional/Provincial office in your area.

The Micro, Small and Medium Enterprise Development (MSMED) Council is an Inter-agency body established on 24 January 1991 by virtue of Republic Act No. 6977 (as amended by R.A. No. 8289 on 6 May 1997 and further amended by R.A. No. 9501 on 23 May 2008), otherwise known as the “Magna Carta for Micro, Small and Medium Enterprises (MSMEs).”

The Council is responsible for the promotion, growth, and development of MSMEs in the country by facilitating and closely monitoring national efforts in the MSME development.

Pursuant to Republic Act 10644: Go Negosyo Act, the Council is composed of the following:
-    Secretary of Trade and Industry – as Chairman

-    Secretary of Agriculture

-    Secretary of the Interior and Local Government

-    Three (3) representatives from the MSME sector representative for Luzon, Visayas and Mindanao with at least one (1) representative from the microenterprise sector

-    One (1) representative from the women sector designated by the Philippine Commission on Women

-    One (1) representative from the youth sector designated by the National Youth Commission

-    Chairman of Small Business Corporation

Advisory unit
-    Secretary of Science and Technology

-    Governor of the Bangko Sentral ng Pilipinas

-    President of the Land Bank of the Philippines

-    President of the Development Bank of the Philippines

-    Director-General of National Economic and Development Authority

-    One (1) representative from the Labor sector, nominated by accredited labor groups

-    A representative of the microfinance non-government organizations (NGOs)

-    A representative of University of the Philippine-Institute for Small Scale Industries (UP-ISSI)

-    President of the Credit Information Corporation

Republic Act No. 10644, otherwise known as “Go Negosyo Act”, seeks to strengthen micro, small and medium enterprises (MSMEs) to create more job opportunities in the country. It was signed into law by President Benigno Simeon C. Aquino III on July 15, 2014. The Department of Trade and Industry (DTI) issued Department Administrative Order No. 14-5 Series of 2014: “Implementing Rules and Regulations for Republic Act No. 10644.

The basic policy of “Go Negosyo Act” is to foster national development, promote inclusive growth, and reduce poverty by encouraging the establishment of MSMEs that facilitate local job creation, production and trade in the country.

-    Establishment of Negosyo Centers in all provinces, cities and municipalities nationwide;
-    Establishment of a Start-up Fund for MSMEs to be sourced from the MSME Development Fund and BMBE Fund;

-    Technology transfer, production and management training, and marketing assistance for SMEs;

-    A unified and simplified business registration through automatic approval of business permits and licenses that are not approved for any reason within 15 days; and,

-    Reconstitution of the MSME Development Council and its additional functions

The MSME Development (MSMED) Council shall encourage public-private partnerships in the establishment and management of Negosyo Centers. Coordination and collaboration with Local Government Units (LGUs) and other agencies and organizations are imperative to avoid duplication of efforts and to foster coordinated action.

Yes, existing Centers may continue to operate as Negosyo Centers subject to the provisions of the Go Negosyo Act and its Implementing Rules and Regulations.

MSMEs, as defined in Section 3 of R.A. No. 9501, may avail of the services of the Negosyo Center, to wit: “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 but 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    :  not more than Php3,000,000.00
Small    :    Php3,000,001.00 – Php15,000,000.00
Medium    :    Php15,000,001.00 – Php100,000,000.00

The above definitions shall be subject to review and adjustment by the Micro, Small and Medium Enterprises Development (MSMED) Council as mandated by R.A. No. 6977, as amended by R.A. No. 8289.”

The MSMED Council, through the Department of Trade and Industry, is the coordinating and supervising body for all agencies involved in the establishment and operation of Negosyo Centers. It shall perform oversight functions and shall assign personnel to fulfill the functions of the Negosyo Centers.

The MSME Development (MSMED) Council shall encourage public-private partnerships in the establishment and management of Negosyo Centers. Coordination and collaboration with Local Government Units (LGUs) and other agencies and organizations are imperative to avoid duplication of efforts and to foster coordinated action.

Yes, existing Centers may continue to operate as Negosyo Centers subject to the provisions of the Go Negosyo Act and its Implementing Rules and Regulations.

MSMEs, as defined in Section 3 of R.A. No. 9501, may avail of the services of the Negosyo Center, to wit: “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 but 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    :  not more than Php3,000,000.00
Small    :    Php3,000,001.00 – Php15,000,000.00
Medium    :    Php15,000,001.00 – Php100,000,000.00

The above definitions shall be subject to review and adjustment by the Micro, Small and Medium Enterprises Development (MSMED) Council as mandated by R.A. No. 6977, as amended by R.A. No. 8289.”

The MSMED Council, through the Department of Trade and Industry, is the coordinating and supervising body for all agencies involved in the establishment and operation of Negosyo Centers. It shall perform over sight functions and shall assign personnel to fulfill the functions of the Negosyo Centers.

The Negosyo Centers will be responsible for promoting “ease of doing business and facilitating access to services for MSMEs within its jurisdiction.” The Centers shall have the following functions

1.    Business Registration Assistance
a.    Accept and facilitate all new registration and renewal of application of MSMEs, including application for Barangay Micro-Business Enterprise (BMBE);

b.    Coordinate with the representative local government units (LGUs) and liaise with concerned government agencies to process the duly accomplished forms submitted by the MSMEs; and,

c.    Implement a unified business registration process preferably through automated systems such as Philippine Business Registry (PBR).

2.    Business Advisory Services

a.    Assist MSMEs in meeting regulatory requirements to start and sustain the business;

b.    Build local support networks and establish market linkages for MSME development through the Micro, Small and Medium Enterprises Development (MSMED) Council and DTI;
c.    Facilitate access to grants and other forms of financial assistance, shared service facilities and equipment, and other support for MSMEs through national government agencies (NGAs);

d.    Ensure management guidance, assistance and improvement of the working conditions of MSMEs;

e.    Co-organize with the local chambers of commerce, other business organizations and government agencies, a mentoring program for prospective and current entrepreneurs and investors; and,

f.    Conduct other programs or projects for entrepreneurial development in the country aligned with the MSMEs development plan.

3.    Business Information and Advocacy
a.    Provide information and services in training, financing, marketing, and other areas as may be required by MSMEs;

b.    Establish and maintain a databank which will support business information requirements of MSMEs;

c.    Promote ease of doing business and access to services for MSMEs within its jurisdiction;

d.    Support private sector activities relating to MSMEs development;

e.    Encourage government institutions that are related to the business application process to help promulgate information regarding the Negosyo Center;

f.    Coordinate with schools and related organizations on the development of youth entrepreneurship program; and,

g.    Encourage women entrepreneurship through access to information, training, credit facilities, and other forms of assistance.

To be an accredited P3 MFI an organization should be qualified as:

a. Corporation, cooperative or bank (with license to engage in lending)
b. Regulated by the Securities and Exchange Commission, Cooperative Development Authority or the Bangko Sentral ng Pilipinas
c. At least one (1) year as an MFI
d. Has at least P500,000 minimum capitalization
e. Has an asset size of at least P5 billion
f. Has positive net income in the last 12 months
g. Has PAR – 30 not morethan 20% net of provisioning
h. Has organizational capability (e.g. with board of directors, management team, and retail lending unit in place)

To be recognized as an MFI for the P3 program, an applicant must submit the following requirements:

a. Duly accomplished loan application
b. Valid Business registration papers
c. Interim financial statements not more than six (6) months old
d. Audited FS not more than 18 months old
e. Proof of organizational capability

a. Interest rates to borrowers per month is up to 2.5%
b. Collection system to be determined by Conduit
c. Credit line to MFI will have a one year life subject to annual review
d. MFI should make first availment on the credit line within 90 days, otherwise credit line shall be revoked
e. MFI should relend to qualified micro end borrowers any loan amount availed from SBC within 60 days, otherwise funds should be returned to SBC
f. Failure to return to SBC any loan amount not relent to qualified micro end borrower within 60 days shall be subjected to a penalty rate of 2% monthly
g. SBC shall absorb up to 20% loss arising from failure to collect from micro end borrowers; any excess loss shall be for the acoount of the MFI; SBC shall sctrictly validate the occurrence of non-payment by the micro end borrower
h. SBC shall stop dealing with MFI should any of the following occur:
1. Ghost borrowers
2. Borrowers are not engaged in livelihood activity
3. MFI fails to pay SBC despite actual payment made by micro end borrower

Once an accredited P3 MFI, the institution must follow certain guidelines and terms by the Small Business Corporation, including the following:

a. The MFI can receive up to 10% of total P3 on-lending fund but not to exceeed P200 million per conduit
b. Funds will be released via bank transfer or cheque
c. SB Corp may allow advance drawdown depending on financial profile of the MFI but not to exceed 50% of the approved loan amount at any point
d. Repayment term of up to 24 months (monthly or quarterly) with 2% interest rate
e.  Collection system of post dated checks of MFI corresponding to approved loan amortization schedule

Negosyo Centers are established to promote ease of doing business and facilitate access to various business development services to MSMEs within its jurisdiction. The Negosyo Centers provide business registration assistance, business advisory services, and business information and advocacy in the areas of: productivity improvement, technology upgrading, market information, product and market development, trade promotion, financing and entrepreneurial development. The Negosyo Centers are established in all provinces in the country (refer to attached Directory of Negosyo Centers as of 31 May 2016). An online directory is also available at negosyocenter.gov.ph to find the address of the Negosyo Center nearest to you.

The BSMED also provides business advocacy, advisory and information services thru the BSMED Knowledge Management (KM) Center. Information are available at the BSMED or through the DTI website http://www. dti.gov.ph/businesses/msmes. You may also find reading materials that could help you in your micro-, small or medium enterprise at http://dti.gov.ph/businesses/msmes/msme-resources/msme-publications.

The BSMED KM Center is open from 8:00 a.m. to 5:00 p.m. Monday through Friday at 2F Trade and Industry Building, 361 Sen. Gil J. Puyat Avenue, Makati City. The Bureau can be contacted at phone numbers: (02) 751.5096, (02) 897 1693, (02) 897-7596; Fax no.: (02) 896.7916 or e-mail: bsmed@dti.gov.ph.

Yes. All materials may be downloaded for free.

MSMEs, as defined in Section 3 of R.A. No. 9501, may avail of the services of the Negosyo Center, to wit: “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 but 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    :  not more than Php3,000,000.00
Small    :    Php3,000,001.00 – Php15,000,000.00
Medium    :    Php15,000,001.00 – Php100,000,000.00

The above definitions shall be subject to review and adjustment by the Micro, Small and Medium Enterprises Development (MSMED) Council as mandated by R.A. No. 6977, as amended by R.A. No. 8289.”