Section 8May 6, 1997, Sec./Art. 8

Sec. 11 of Republic Act No. 6977 is hereby amended to read as follows:

"Sec. 11 Creation of Small Business Guarantee and Finance Corporation. - There is hereby created a body corporate to be known as the Small Business Guarantee and Finance Corporation, hereinafter referred to as SBGFC, which shall source and adopt development initiatives for globally competitive small and medium enterprises in terms of finance, technology, production, management and business linkages, and provide, promote, develop and widen in both scope and service reach various alternative modes of financing for small and medium enterprises, including but not limited to, direct and indirect project lending, venture capital, financial leasing, secondary mortgage and/or rediscounting of loan papers to small business, secondary/regional stock markets: Provided, That crop production financing shall not be serviced by the Corporation.

"The Corporation shall guarantee loans obtained by qualified small and medium enterprises, local and/or regional associations' small enterprises and industries, private voluntary organizations and/or cooperatives, under such terms and conditions adopted by its Board. It may guarantee loans up to one hundred percent (100%). It may also provide second level guarantee (i.e., reinsurance) on the credit and/or investment guarantees made by credit guarantee associations and other institutions in support of small entrepreneurs.

"The Corporation shall become liable under its guarantees upon proof that the loan has become past due under such terms and guidelines adopted by its Board and printed on the contract of guarantee.

"The Small Business Guarantee and Finance Corporation shall:

"(a) be attached to the Department of Trade and Industry and shall be under the policy, program and administrative supervision of the SMED Council;

"(b) have its principal place of business in Metro Manila and endeavor to have one or more branch offices in every province of the country;

"(c) exercise all the general powers conferred by law upon corporation under the Corporation Code as are incidental or conducive to the attainment of the objectives of this Act;

"(d) have a board of directors upon to which the powers of the Corporation shall be vested, to be composed of nine (9) members including:

"(1) three (3) members of the private sector appointed by the President upon recommendation of the SMED Council and from among whom the Chairman of the Board shall be appointed by the President to serve on a full-time basis;

"(2) the Secretary of Trade and Industry or his Undersecretary; and

"(3) a representative from each of the five (5) government financial institutions mandated in this Act to provide the initial capital of the Corporation, who shall be designated, under guidelines agreed upon by the Board Chairmen of said institutions;

"(e) Notwithstanding the provisions of Republic Act No. 6758, and Compensation Circular No. 10, series of 1989 issued by the Department of Budget and Management, the Board of Directors of SBGFC shall have the authority to extend to the employees and personnel thereof the allowance and fringe similar to those extended to and currently enjoyed by the employees and personnel of other government financial institutions."