- August 22, 2018
- Posted by: Atty. James Biron
- Categories: Banking, Commercial
Republic Act No. 11057 or the Personal Property Security Act, was signed by the President on August 17, 2018 giving micro, small and medium enterprises (MSMEs) improved access to financing from banks and lending institutions which provides creation, perfection and determination of priority, establishment and centralized notice registry and enforcement of security interests in personal property.
The list of assets acceptable to banks and other financial institutions as collateral was. Republic Act No. 11057 provides that collateral shall be considered sufficient whether it is specific or general if it reasonably identifies the collateral.
The new law stated that “a description such as all personal property, all equipment, all inventory or all personal property within a generic category of the grantor is sufficient.” Financial institutions and formal lending firms prefer real estate, like most banks and other immovable assets as collateral, this makes it difficult for small-scale entrepreneurs to apply for loans for their businesses.
The establishment of an electronic registry by the Land Registration Authority is also required by Republic Act No. 11057 to reduce the risks involved in banks accepting “movable” collateral or those that are not in real estate. The registry will contain information on personal valuables that were used as collateral as an assurance for banks and lenders that any collateral being offered them has not yet been used for another loan.
Republic Act No. 11057 author in the Senate, Sen. Bam Aquino said, improving access to financing for small businesses would “broaden the use of ‘movable assets,’ like bank accounts receivable, inventory, equipment, vehicles, agricultural products and even intellectual property rights.”
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