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Movable asset-based financing by natural persons comes into effect: FRA Amendments to executive regulations allow for greater funding opportunities for SMEs, says Omran
Mohamed Omran, Head of the Financial Regulatory Authority (FRA), has revealed that the registration of the first movable asset as collateral for financing by a natural person has been completed. The collateral, worth a total of EGP 400,000, was registered following an amendment made to the executive regulations of the law organising movable collaterals. The amendments were made following a decision by Prime Minister Mostafa Madbouly in mid-April. It stipulated that natural persons, rather than only legal persons, can provide funding for projects. Omran said the amendment allows natural persons to finance productive and service projects based on registered movable assets in the possession of the debtor. It allows the creditor, in the event of non-payment of the interest incurred or non-repayment of the principal by the debtor, to seize the specific asset and have it sold with a preferential claim over the proceeds, i.e. the right to be repaid before other creditors. Omran also said that the amendment is important for allowing greater financing opportunities for productive and service projects, especially small and medium-sized enterprises (SMEs). These enterprises normally cannot provide a guarantee to obtain financing except for movable assets. These assets remain in the possession of the debtor, while they act as collaterals, which allow using them in production or service activity. Omran noted that the volume of registered collaterals until the end of March amounted to 43,309 at a value equivalent to EGP 647.1bn, including EGP 5.3bn worth collaterals made in March alone. This indicates that many productive and service projects, especially SMEs, have more access to funding for their activities.
