MANILA, Philippines – Voting 21-0, the Senate passed on 3rd and final reading a bill that would give micro, small, and medium enterprises (MSMEs) better access to financing.

Senate Bill No. 1459 or the Personal Property Security Act, sponsored by Senator Paolo Benigno Aquino IV and Senator Francis Escudero, seeks to expand the list of assets acceptable to banks as collateral and to reduce the risks associated with movable collaterals. 

Movable collaterals include bank accounts, accounts receivable, inventory, equipment, vehicles, agricultural products, and even intellectual property rights.

At present, the country already recognizes “a diverse set of movable assets acceptable as collateral for loan purposes, like motor vehicles, equipment, and standing crops, such as rice or sugarcane.” Yet most banks and financial institutions still prefer land and real property as collateral, making it difficult for MSMEs to access loans.

“With the Personal Property Security Act, Filipinos will have better access to lower-interest loans, and more Filipino families can grow their business and livelihood for a brighter future,” Aquino said.

Escudero, for his part, said a unified and modern legal framework would be established for securing obligations with personal property.

“The proposed measure comes at a perfect time when investment demand is growing and the desire for self-sufficiency by Filipinos is strong,” Escudero said.

To reduce the risk posed by accepting movable collaterals, Aquino said the bill would mandate a comprehensive, centralized, online, and notice-based national collateral registry with the Land Registration Authority (LRA).

The registry would make it easy for banks and lenders to check if any collateral being submitted has not been used for another loan. 

The House of Representatives already passed a counterpart measure last February. A bicameral conference committee would be convened to reconcile differences  between the two versions of the bill.

After that, the measure would be sent to Malacañang for President Rodrigo Duterte’s signature. (READ: Duterte to pour ‘billions of pesos’ into funding for MSMEs) – Rappler.com