Empowering Philippine Small Businesses through Government Assistance" By Ding Ortiz

#SmallBusinessEmpowerment #PhilippineGovernmentAssistance #EntrepreneurSupport #SmallBusinessFunding #BusinessGrowth #BusinessDevelopment #BusinessLoan #SmallBusinessLoan #EntrepreneurialSupport

The question of whether the Philippine government provides support for small businesses is a frequent inquiry I receive from friends and relatives who run SMEs.Does the Philippine government provide support for small businesses?

Small and medium enterprises (SMEs) play a crucial role in the Philippine economy, providing employment and driving economic growth. The Philippine government recognizes this importance and has implemented various initiatives to support and encourage the growth of SMEs. This article will outline the different forms of assistance available to small businesses in the Philippines, including access to financing, business counseling, and training services. Whether you are just starting out or looking to expand your existing business, this article will provide valuable information on the support available from the Philippine government.

 Mortality rate of sme in the Philippines

According to the Philippine Statistics Authority [1], more than 1.08 million establishments operated in 2021 which generated total employment of 8.57 million. A rapid nationwide survey conducted by a research paper [2] examined the initial impact on MSMEs of the Enhanced Community Quarantine (ECQ) and lockdown measures. This paper also discussed the relation between the SME mortality factors and the small business owner-manager, based on the life cycle stage as an essential part [3]. The results of the study showed that the mortality rate of small businesses is affected by their life cycle stage, as well as the factors such as full time dedication, exercising operational activities and managerial roles, discipline, purchase abilities, negotiation, finance and family motivation in keeping up the business. Overall, the mortality rate of SMEs in the Philippines is quite high, indicating the need for more effective measures to improve the success rate of small businesses.

Success rate of sme in the philippines

 The success rate of Small and Medium Enterprises (SMEs) in the Philippines is highly dependent on the industry they are in and the amount of capital they have. According to a study by the National Economic and Development Authority (NEDA) [1], the survival rate of SMEs in the Philippines is around 70 percent within the first year of operation. However, the percentage of surviving businesses decreases significantly over time, with only half of the businesses surviving after five years [2]. This is due to the lack of resources such as capital and infrastructure as well as the lack of access to financing, which can be a major obstacle for SMEs in the Philippines [3]. Additionally, the lack of access to technology, inadequate government support and inadequate management and marketing skills can also contribute to the low survival rate of SMEs in the Philippines.

Financial Assistance for Small Businesses:

Financial assistance is crucial for small businesses as it allows them to invest in their operations, expand, and grow. The Philippine government provides this through loans and subsidies from government agencies like the Small Business Corporation (SB Corp) and the Department of Trade and Industry (DTI).

Small Business Corporation (SB Corp) provides financing solutions and support services to micro, small, and medium enterprises (MSMEs) through its various loan programs such as the Pondo sa Pagbabago at Pag-asenso (P3) program, which provides working capital and financing for business expansion.

The Department of Trade and Industry (DTI) also provides financial assistance through its various loan programs such as the Negosyo Serbisyo sa Barangay (NSB) program, which provides small loans to micro and small enterprises in rural areas. The DTI also administers the Shared Service Facility (SSF) program, which provides grants and loans to MSMEs for the acquisition of machinery and equipment to improve their productivity.

 Training and Capacity Building for Small Businesses:

Training and capacity building are crucial for the growth and development of small businesses. The Philippine government provides this through organizations such as the Technical Education and Skills Development Authority (TESDA) and the Department of Science and Technology (DOST).

TESDA provides various skills training programs for MSMEs through its various training centers. The aim is to equip MSMEs with the skills they need to improve their operations and become more competitive. TESDA also provides assessment and certification services to help MSMEs get recognized for their skills and expertise.

The Department of Science and Technology (DOST) provides technical assistance to MSMEs through its Small Enterprise Technology Upgrading Program (SETUP). The program provides technical assistance, training, and access to funding to help MSMEs improve their competitiveness and adopt new technologies.

Tax Incentives and Simplification of Business Registration:

Tax incentives and a streamlined business registration process can help small businesses save time and money, and allow them to focus on their operations and growth. The Philippine government provides this through the Bureau of Internal Revenue (BIR) and the Department of Trade and Industry (DTI).

The Bureau of Internal Revenue (BIR) provides tax incentives to MSMEs, including tax holidays, tax exemptions, and tax credits. The aim is to reduce the tax burden on small businesses and help them become more competitive.

The Department of Trade and Industry (DTI) streamlines the business registration process through its Business Name Registration (BNR) program. The program makes it easier for MSMEs to register their businesses and obtain the necessary licenses and permits.

 Access to Market for Small Businesses:

Access to market is critical for small businesses as it allows them to reach customers and grow their operations. The Philippine government provides this through programs that connect small businesses to potential customers and suppliers.

One such program is the DTI's Negosyo Centers program, which serves as a one-stop-shop for MSMEs seeking assistance in accessing markets, financing, and other business development services. The DTI also organizes trade fairs and exhibitions to showcase the products and services of MSMEs and connect them with potential customers and partners.

Infrastructure and Facilities Support for Small Businesses:

Infrastructure and facilities support can help small businesses become more productive and competitive. The Philippine government provides this through the Department of Agriculture (DA) and the Department of Tourism (DOT).

The Department of Agriculture (DA) provides support to MSMEs involved in agriculture,

Some of the programs offered by government banks and quasi-financial government units in the Philippines that support small businesses:

 Small Business Corporation (SB Corp):

•     Pondo sa Pagbabago at Pag-asenso (P3) program: provides working capital and financing for  business expansion.

•     Kapital Access for Young and Small Enterprises (Kapatid) Program: provides credit to young and small enterprises for their business needs.

 Development Bank of the Philippines (DBP):

  Small and Medium Enterprise (SME) Loan Program: provides financing solutions to micro, small, and medium enterprises.
    Agri-Agra na program: provides financing solutions to agribusinesses and farmers. 

Land Bank of the Philippines (LBP):

• Agribusiness and Rural Financing Department (ARFD): provides financing solutions to agribusinesses and rural enterprises. Small and Medium Enterprise (SME) Loan Program: provides financing solutions to micro, small, and medium enterprises.
•     Cooperative Development Authority (CDA):
•     Cooperative Financing Program: provides financing solutions to cooperatives in the Philippines.
•     Microfinance Council of the Philippines (MCPI):
•     Microfinance Program: provides financing solutions to micro-entrepreneurs in the Philippines.

These are just some of the programs offered by government banks and quasi-financial government units in the Philippines. 

Government programs and fiscal policies aimed at making private banks more supportive of small businesses and entrepreneurship:

 Credit Surety Fund Program: This program is designed to provide a guarantee mechanism for loans extended by private banks to small businesses. The program is administered by the Small Business Corporation (SB Corp) in partnership with private banks.

 Expanded Government Guarantee System for Micro and Small Enterprises (EGSME): This program provides guarantees to private banks for loans extended to micro and small enterprises. The program is administered by the Small Business Corporation (SB Corp) and the Development Bank of the Philippines (DBP).

 Credit Information System (CIS): This system provides private banks with access to credit information on small businesses, which can help them make more informed lending decisions. The system is maintained by the Credit Information Corporation (CIC), a government-owned and controlled corporation.

 Tax incentives for banks that lend to small businesses: The government provides tax incentives to private banks that lend to small businesses, such as tax holidays, tax exemptions, and tax credits. This is aimed at encouraging private banks to increase their lending to small businesses and support entrepreneurship.

 Depository Bank Incentives: The government provides incentives to private banks that act as depositories for the Small Business Corporation (SB Corp) and other government financing programs. This is aimed at encouraging private banks to support small businesses and entrepreneurship by providing them with deposit-taking services.

These are just some of the government programs and fiscal policies aimed at making private banks more supportive of small businesses and entrepreneurship. The government is continuously working to improve and update these programs to better serve the needs of small businesses and entrepreneurs in the Philippines.

 New and upgraded laws enacted or revised by the Philippine government to support small and medium enterprises (SMEs):

1.     Republic Act No. 9501: The Magna Carta for Micro, Small and Medium Enterprises - This law was enacted in 2008 to provide support and assistance to micro, small and medium enterprises in the Philippines. It aims to promote the growth and development of SMEs, and provides them with access to financing, marketing, and technology.
2.     Republic Act No. 10644: The Go Negosyo Act - This law was enacted in 2014 to provide support to micro, small, and medium enterprises and to promote entrepreneurship in the Philippines. It creates a Go Negosyo Center, which provides assistance and services to entrepreneurs, including business counseling, training, and access to financing.
3.     Republic Act No. 11223: The Universal Health Care Law - This law was enacted in 2019 and requires all Filipinos to enroll in a National Health Insurance Program. It also requires all businesses, including SMEs, to provide health insurance coverage for their employees.
4.     Republic Act No. 11449: The Corporation Code of the Philippines - This law was revised in 2020 to simplify the process of registering a corporation and to provide a more streamlined process for SMEs. It aims to make it easier for SMEs to start and grow their businesses, and to provide them with greater access to financing and other support services.
5.     Republic Act No. 11494: The Bayanihan to Recover as One Act - This law was enacted in 2020 in response to the COVID-19 pandemic. It provides support to businesses, including SMEs, by providing financial assistance, tax relief, and other forms of support.

Local government level, different cities and municipalities in the National Capital Region (NCR) and throughout the Philippines have implemented various initiatives to support and encourage the growth of small and medium enterprises (SMEs). Here are some examples:

1.     Quezon City: The Quezon City government has established the Quezon City Micro, Small, and Medium Enterprise Development Office (QCMSMEDO) to provide support and assistance to SMEs. The office provides training, business counseling, and access to financing and marketing services.
2.     Makati City: The Makati City government has established the Makati SME Council to support the growth and development of SMEs. The council provides business counseling, training, and access to financing and marketing services.
3.     Taguig City: The Taguig City government has established the Taguig City Business Center to provide support and assistance to SMEs. The center provides business counseling, training, and access to financing and marketing services.
4.     Davao City: The Davao City government has established the Davao City Investment Promotions Center to provide support and assistance to SMEs. The center provides business counseling, training, and access to financing and marketing services.
5.     Cagayan de Oro City: The Cagayan de Oro City government has established the Cagayan de Oro City SME One-Stop Shop to provide support and assistance to SMEs. The one-stop shop provides business counseling, training, and access to financing and marketing services

So on the question , Does the Philippine government provide support for small businesses?

The answer is a resounding, Yes!! the Philippine government provides support for small businesses in various forms. This includes access to financing, business counseling and training services, tax incentives, and other forms of assistance aimed at promoting the growth and success of small and medium enterprises (SMEs) in the country. The Department of Trade and Industry (DTI) and the various government-owned and controlled banks are among the key institutions that provide these services and support to SMEs in the Philippines.