New legislation has been drafted by the government to make it easier and cheaper for small and medium-sized businesses to obtain financing.
Abdullah bin Adel Fakhro, Minister of Industry and Commerce, said the bill, which has not yet been submitted to parliament, provides for the creation and enforcement of security interests in movable property.
Speaking at a luncheon hosted by the Rotary Club of Manama at the Gulf Hotel Bahrain Convention & Spa yesterday, Fakhro said the law would allow companies to use any asset as collateral for loans.
“For example, if you have accounts receivable in the market, you can use that as security to get a short-term loan,” he explained.
According to experts, accounts receivable (AR) is money that customers owe a business for goods and services that have been delivered but not yet paid for. Assets recorded on the balance sheet and considered current assets. This means it is expected to be converted into cash within a year.
It is created when a business sells goods or services on credit. The company then sends the customer an invoice stating the amount owed and the due date. Customers are expected to pay their invoices on time, but they are not always paid.
In response to questions from business people, the minister said the law applies to all security interests in movable property, including inventory, equipment, accounts receivable and investment property.
However, it does not apply to security interests in real estate or intellectual property.
Fakhroh said the government is also working on a credit rating system for businesses in partnership with the Bahrain Chamber of Commerce and Industry and Benefit, the country’s payment exchange and electronic financial trading network.
This system of evaluating a company’s creditworthiness was intended to help lenders determine the risk of lending money to a company and set the interest rate on the loan.
According to the Minister, such a scheme would go a long way in addressing the difficulties faced by local small and medium-sized enterprises (SMEs) in obtaining loans.
“93 per cent of Bahrain’s businesses are small and medium-sized enterprises, accounting for 70,000 commercial registrations and employing more than 70 per cent of the private sector workforce.”
Fakhroh also said that the Ministry of Commerce and Industry will launch an upgraded version of the Sigirat digital platform that will streamline business registration and license issuance in Bahrain by the end of next year.
He said Sijilat 4.0 will improve on the 3.0 version launched in August by leveraging AI and other advanced technologies and incorporating online chat support, broader e-payments and better integration with other government systems. It’s planned.
The system is a one-stop shop for companies to start, manage and grow their operations in the country.
avinash@gdnmedia.bh
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