NASSAU, BAHAMAS – Prime Minister Philip Davis emphasized the potential of the Movable Property Security Interests Bill, 2024 in empowering small and medium-sized businesses by recognizing the value in assets beyond real estate that can be leveraged as collateral for borrowing.
The new legislation, he explained, opens up opportunities for businesses to use machinery, inventory, equipment, and even intellectual property to secure the capital needed for growth and expansion. While addressing the legislation in Parliament, Prime Minister Davis said: “Think about the mom-and-pop shops. The majority of these businesses don’t typically own land or valuable buildings. Most of these businesses are housed through tenancy, but that doesn’t mean that they have nothing of value to offer. For example, they own machinery, inventory, equipment, vehicles, accounts receivables. They may even own intellectual property that has great value. However, our antiquated system has not recognized the diverse range of assets that represent the true value held by business owners.”
Deputy Prime Minister Chester Cooper, who seconded the tabling of the Movable Property Security Interests Bill, 2024along with the accompanying compendium of legislation, stated that the legislation is revolutionizing access to credit by offering Bahamians the opportunity to leverage movable assets as collateral, providing new opportunities for growth and innovation, particularly for small and medium enterprises (SMEs).
Cooper continued, “This legislation seeks to do one thing: open doors for Bahamians by revolutionizing access to credit and creating opportunities for growth and innovation. It makes it easy and efficient to pledge movable assets like inventory as collateral to a bank.”
He lauded the Central Bank, the Office of the Attorney General, the Ministry of Finance, and the Ministry of Economic Affairs, which all played critical roles in crafting this forward-looking legislation. He noted that the Bill has been in consultation for quite some time and is widely supported, including by the Clearing Banks Association (CBA).
“Their efforts reflect our shared goal of equipping The Bahamas with tools that foster an inclusive and thriving economy. Today, we move another step closer to fulfilling our commitment to address systemic challenges in our financial and business landscape. This bill is a practical tool designed to empower. It introduces a robust framework for leveraging movable property – such as inventory, equipment, and receivables – as collateral for loans,” said Cooper.
He pointed out that, for far too long, traditional lending practices have overly relied on fixed assets like real estate as the primary means of securing credit.
“This has left many capable and industrious Bahamians without access to the financial support they need to turn their ideas into reality,” said Cooper.
He also noted that the current floating debenture/floating charge system, which requires stamping and lodging with the registrar, is cumbersome, inefficient, and difficult to enforce.
“For example, vehicles are regularly sold without the lender’s permission. While the lender can still repossess the vehicle, the duped buyer is left holding the bag,” he added.
Cooper explained that this initiative aligns seamlessly with the broader ecosystem being cultivated to support SMEs. Alongside the resources of the Small Business Development Centre (SBDC), the Bahamas Venture Capital Fund, and the Tourism Development Corporation, the legislation ensures that budding businesses have more pathways to secure the capital they need.
“We are not just focusing on start-ups; established businesses with steady operations but limited cash flow also stand to benefit. They can leverage their tangible and intangible assets to access loans that will enable them to scale their operations, hire more workers, and contribute to our nation’s prosperity. They can empower themselves, create wealth—just like we promised we would support in our Blueprint for Change,” Cooper said.
Cooper also highlighted the introduction of a centralized electronic register, which will contain all records of security interests in movable property. The register will be accessible online and in real-time, providing a streamlined process for creditors to search for information on a debtor’s collateral and enabling the discoverability of all security interests as soon as they are registered.
Opposition Finance Spokesman Kwasi Thompson expressed concerns, saying the country is facing a crisis in small business funding and ease of doing business. He argued that while the bill could potentially increase the types of assets that can be used as collateral, the Davis administration has once again missed an opportunity to enact impactful reforms.
“We continue to witness banks in our country piling on more fees and charges for Bahamian customers while providing less and less customer service,” Thompson said. “While the expanded range of movable assets as collateral might be beneficial, it does not address the overly cautious lending practices of banks.”
Thompson added that the bill focuses on what can be used as collateral but doesn’t address whether banks will actually accept these assets as sufficient security, especially when lending to SMEs.
He also noted a glaring absence of any mention of the Small Business Development Centre (SBDC) in the legislation. “This institution, tasked with providing crucial guidance and support to entrepreneurs and small businesses, has been underfunded and underutilized by the PLP. The SBDC should be a cornerstone of the government’s strategy to promote entrepreneurship and economic diversification,” Thompson said.
