The new law on security interests promises small and medium-sized companies quick access to credit lines, as it simplifies procedures for constituting and executing guarantees.
Last week the Congress of the Republic,approved amendments to the Law on Secured Transactionsthat has existed since 2007 to facilitate access to bank loans. With the modifications, any transaction that has the effect of guaranteeing an obligation of the debtor with the creditor is typified as a security interest.
In Guatemala, companies will now have the option of accessing financing using their inventory, agricultural products, machinery, equipment and other assets as collateral.
The Congress of the Republic approved the reforms toDecree 51-2007, on the Law on Secured Transactions, which aims to regulate security interests in loans, non-monetary obligations, credit titles and titles representing merchandise, among other things. The changes will take effect one month after they are published in the newspaper Diario de Centroamérica.
The law passed by the Legislature allows companies to use their personal property as collateral to take out productive loans.
From a statement issued by the National Assembly of Nicaragua:
During the plenary session on October 5, the National Assembly approved in general the Secured Transactions Law, a legal instrument to promote access to credit for micro, small and medium enterprises by putting up any movable goods used in their daily work as collateral.
Starting from May 15 organizations can use inventories, cash flows, patents and other things as collateral for bank loans.
The regulations for the Law on Secured Transactions are now ready and the law will take effect on May 15, and from that date, companies will be able to put up crops, agricultural machinery, copyrights, among other things, as collateral for the purpose of obtaining bank loans.
In Costa Rica the Secured Transactions Law which authorizes the use of intellectual property as collateral for loans will take effect in May 2015.
In an opinion piece published in Elfinancierocr.com, attorney Gabriela Miranda explains that in addition to allowing the use of movable property such as agricultural machinery and crops, the law has a broader scope, "...
In order to facilitate access to inventory credit for SMEs plans are underway to reform the Law flexibilizing on chattel mortgages.
From a press release by the Ministry of Economic Affairs and Competitiveness:
"The Cabinet Council has approved a bill that promotes access to credit and modernizes the system of mortgage deposits and has authorized the Minister of Trade and Industry, by Resolution of Cabinet, to present the initiative before the National Assembly.
The Economic Committee in Congress has agreed to pass a law that will enable collateral such as merchandise or intangible assets such as patents to be used to obtain loans.
The law will facilitate the process for natural and legal persons to apply for loans using collateral such as their properties, tools, patents, trademarks and merchandise. "It protects consumers more, is more respectful of consumer rights, is much fairer and avoids abuses," said the congressman, Francisco Zablah.
A bill has been presented to the Legislature which will regulate the use of inventories, intangible assets and other movable assets as security for financing.
A statement from the MEIC reads:
San Jose, February 7, 2013. In order to increase access to credit, particularly for SMEs, the financial sector, the private sector and the Government, with the help of international consultants, over the last few months have been working on the basis for a proposed Law on Secured Transactions.