On 1st April 2025, an important new law came into effect in Scotland, bringing major changes to how businesses can use their moveable assets (such as vehicles or machinery) to help them secure loans. These changes are part of the Moveable Transactions (Scotland) Act 2023 (“the Act”) and are designed to make business borrowing easier, clearer, and more modern.

Here’s a brief overview of the key changes and what they could mean for you and your business:

1.  New Way to Secure Loans – “Statutory Pledge”

In the past, if you wanted to borrow money against an asset in Scotland, you could only do that easily with land or buildings. Now, a new type of security called a Statutory Pledge lets businesses and sole traders use moveable assets like:

  • Tractors, lorries and other vehicles
  • Machinery, such as combine harvesters, balers, ploughs or milking equipment
  • Stock, including livestock and harvested grain.

To use this new option, the item used as security must be worth at least £3,000 and be fully owned by the borrower. This means, for example, that any machinery bought on hire purchase could only be used as security once all of the finance had been paid off in full.

2.  New Public Registers for Transparency

Two new public registers have been created by the Act:

  • Register of Assignations (for transferring debts or rights)
  • Register of Statutory Pledges (to record securities granted over moveable assets)

These registers will provide transparency around ownership of secured assets, and a clear record of what assets have been used as loan security. This makes it easier to check information, avoid fraud, and reduce confusion. These new registers will be managed by the Registers of Scotland.

3.  No Need to Hand Over Assets

Before this law, to use moveable items as loan security in Scotland, you usually had to give the item physically to the lender or hand over control over it. This was often difficult and impractical for businesses, if they still needed to use the asset as a key part of their business – particularly in the agricultural sector where vehicles and machinery are integral to the running of the farm. Now, with Statutory Pledges, you can keep possession of the asset and continue to use it in your business, while also using it to secure a loan.

4.  Protections for Buyers and Small Businesses

There are safeguards in place under the Act to protect people and businesses when using this new security regime. For example:

  • Only fully owned assets can be used as security.
  • Individuals can only grant pledges for business purposes, not personal ones.
  • There are rules to protect people who unknowingly buy secured assets, such as second-hand machinery or equipment.

5.  Clearer Rights for Borrowers

Under the Act, borrowers now have stronger rights and clearer rules about what happens if a lender tries to enforce the security (for example, if the borrower doesn’t repay the loan). In most cases, enforcement can now be done without needing a court order, however, the enforcement process will involve the lender serving an enforcement notice on the borrower, setting out the details of the debt and the relevant secured property.

What Does This Mean for Your Business?

These changes are expected to:

  • Make it easier for businesses to access finance, and
  • Offer more flexible ways to use assets as security.

It remains to be seen how widely used this new type of security will be in practice, as that will depend on how comfortable banks and lenders are with using moveable assets to back up their lending. It may be that lenders look to take security over moveable assets as well as, rather than instead of, security over land and buildings. However, whether you run a farm or manage a startup, this new security option could help to open new doors for financing and business growth.

For more information and advice, please contact our team.