The government is working double time to finish the guidelines that would govern the implementation of a new law allowing small businesses to obtain bank loans using personal property, like vehicles or equipment, as collateral.
In a statement on Monday (July 15) the Department of Finance (DOF) said it would start on Wednesday (July 17) public consultations on a draft implementing rules and regulations (IRR) for Republic Act No. 11057, or the Personal Property Security Act (PPSA).
The law had been signed by President Rodrigo Duterte last year yet in a bid to accelerate the growth of micro, small and medium scale enterprises, or MSMEs, which provide bulk of employment in the Philippines.
The draft IRR posted on the DOF website allowed loan transactions with so-called tangible or intangible assets, deemed as personal property, as collateral.
“Contracting parties are free to enter into any form of security arrangements over movable property, as long as the security arrangement covering the same is not inconsistent with the PPSA or these rules,” the proposed guidelines read.
The DOF said the law was designed to “promote economic activity” by widening the door for MSMEs to obtain financing through the banking system.
“It also seeks to increase access to credit of MSMEs, as well as farmers and fisherfolk,” the DOF added. /TSB