UAE passes new law to help small and medium businesses

The UAE government has issued Federal Law No (4) of 2020, according to which the companies can secure bank loans by keeping movable properties as collateral. These facilities are introduced to help small and medium businesses during such hard times.

The law expands the possibility of including more assets as collateral. The law also aims to strengthen the UAE’s competitiveness, ease of doing business and to attract foreign direct investment.

Under-secretary at the Ministry of Finance, Younis Haji Al Khoori, along with the law announced the implementation of the electronic registry which will be used to record the assets to ensure project financing. The register will allow the usage of tangible and intangible movable assets such as equipment and tools, receivables, cash flow, crops and others as collateral in order to obtain loans.

He also made it clear that this law will have huge impact on the nation’s economy. As movable properties are accepted as collateral for loans, it will increase the developments that are yet to happen in the country.

He stated that, “This law will improve the ability of the financial institutions to expand their lending operations and regulate current practices associated with them. The associated risks will also be addressed and will smoothen the relationship between the banks, institutions and companies to ensure the rights to all parties”. He pointed out that the provisions listed in the law covers most of the World Bank’s indices that are included in the Doing Business Report.

UAE has implemented many laws in this post-pandemic period which will be beneficial for the businesses in their working. This law is an addition to it, as it will not only help the current businesses but is also an inspiration for the new ones to come.