Guarantees for Loans

In Guatemala, companies will now have the option of accessing financing using their inventory, agricultural products, machinery, equipment and other assets as collateral.

Friday, February 9, 2018

The Congress of the Republic approved the reforms to Decree 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.  

In regards to this issue, the former Minister of Economy, Rubén Morales, told Elperiodico.com.gt that "... collateral securities are an option, since if you do not have the possibility of mortgaging a plot of land or a warehouse, the option is available to do it using machinery or equipment belonging to the company. 'It can be done on goods that can be obtained in the future, such as crops, production or inventories.'"

A statement issued by the Congress of the Republic, explains that with the approval of the reforms "... Any operation that has the effect of guaranteeing an obligation of the debtor with the creditor is typified as a security interest. It can be a company's inventory, its agricultural products, livestock, machinery, equipment, accounts receivable or technological innovations. One of its main benefits is the access to credit for entrepreneurs in a safe and cheap way

It adds that the authorities at the " Ministry of Economy (Mineco) indicated that they welcome the approval of the reforms, since it will allow people who are not subject to loans by the banking entities to have options for obtaining financing or credit lines, registering as a guarantee, their movable assets, such as crops, production or inventories."

See statement by the Congress of the Republic (in Spanish).

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Guarantees and SMEs

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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 Transactions that 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.   

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The law passed by the Legislature allows companies to use their personal property as collateral to take out productive loans.

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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, "...

Costa Rica: Law on Secured Transactions Approved

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Mortgage inventories, cash flow, contracts, intellectual property, trademarks, among others, can be used as an alternative option to traditional collateral on real estate.

Additionally, the law passed by the Legislature on April 30, also allows for current assets or rights given in contracts, equipment, accounts receivable, chattels, crops, tourist bookings and even future rights to the value of timber to be taken into account. The bill is awaiting the signature of the President of the Republic, and subsequent publication, and the issue of the relevant regulations by the General Superintendence of Financial Entities (SUGEF).

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