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Can a Fintech Secure Loans under the Personal Securities Property Act?

November 16, 2020   Philip EvangelouRaymond Chbib

In short- yes you can! And it is highly recommended. 

What is a fintech lender? 

Fintech is the new applications, processes, products or business models in the financial services industry, composed of one or more complementary financial services and provided as an end-to-end process via the internet. Fintech lenders use online technology to provide finance to businesses and individuals. Generally, offering short-term loans with a quick application and approval process.

What is the Personal Property Security Register?

The PPSR is a national database that registers security interest in personal property. For example, to lend against an invoice, a lender will register title over the underlying goods. 

How security interests in personal property are created. Priorities between security interests. When security interests are extinguished. Enforcing security interests. Registration of security interests on the Personal Property Securities Register. 

Fintech loans and the PPSR 

Fintech lenders will almost certainly require a personal guarantee. A personal guarantee being an interest in personal property as security for the loan provided. Hence, if you are lending or giving credit over affected personal property, the PPSR enables you to register your security interest to give you the best priority position should your debtor go broke. In addition, giving notice to others dealing with the debtor or the property as they can search and find your interests. 

The PPSR does not require the loan agreement to take a specific form. For a fintech loan to be secured under the personal property securities act, the loan agreement must create a security interest in favour of the lender. It is the security interest that is registered on the PPSR. Security interests are created by an agreement where a person can take property if a debt is not repaid. 

Additionally, to be registrable under the PPSA, the agreement that is creating the security interest has to be consensual and actually secure the repayment of a debt or performance of some sort of obligation.

What is Personal Property? 

Under the PPSR, a registrable security interest can be granted in almost all types of personal property that is not land, buildings or fixtures. When securing fintech loans, things you can register security interest over include: 

  • Vehicles, boats and aircraft
  • Crops and livestock
  • Stick in tarde
  • Artworks
  • Equipment
  • New or second-hand goods 
  • Patents and copyright 
  • Commercial licenses 
  • Debts and bank accounts and
  • Shares

Why Register on the PPSR? 

If you want proper security when loaning, it is key to register on the PPSR. Registering your security interests correctly on the PPSR can protect you and give you extra rights in the property it’s registered over. Registration will also offer other protections such as ranking you at a high priority over other security interests. Moreover, registering on the PPSR is a way to let people know if personal property such as cars, goods or company assets have security interests over them.

About Philip Evangelou

phillipPhil is a director at OpenLegal. He has over 16 years experience working in private practice and in-house counsel in Sydney and London, giving him expertise in employment law, IP, finance, leases, dispute resolution, insurance and contracts.

About Raymond Chbib

raymond chbibRaymond is a legal intern at OpenLegal, working with our legal content team. He is currently a penultimate student at the University of Technology Sydney, studying a Juris Doctor degree with an undergraduate Bachelor of Global Studies. He is particularly interested in Intellectual Property law and the increasing internationalisation of that area of business.