Legal Definitions - credit mobilier

A "credit mobilier" refers to a type of financial institution or company that operates as a bank. Its primary business involves making loans, specifically by accepting personal property as security for those loans.

A credit mobilier refers to a type of financial institution or company that operates like a bank, primarily by providing loans where the security for those loans is personal property rather than real estate.

In simpler terms, instead of taking a mortgage on land or buildings, a credit mobilier lends money against movable assets such as machinery, vehicles, inventory, or other valuable goods.

Here are some examples to illustrate this concept:

• Example 1: Manufacturing Equipment Loan

  A small manufacturing company, "Precision Parts Inc.," needs to purchase new, specialized machinery to expand its production capabilities. While Precision Parts Inc. leases its factory space and doesn't own real estate, it has valuable existing machinery and the new equipment it plans to acquire. A credit mobilier could offer Precision Parts Inc. a loan, taking the new machinery itself, along with some of the existing equipment, as collateral. This arrangement allows the company to secure financing based on its tangible assets without needing to own property.

  This illustrates a credit mobilier because the institution is acting as a bank, providing a loan, and the security for that loan is the company's personal property (the manufacturing machinery).

• Example 2: Agricultural Asset Financing

  A farmer, Ms. Elena Rodriguez, needs capital to cover operational costs for the upcoming planting season, including seeds, fertilizer, and labor. She owns several valuable tractors, harvesters, and other farm implements, but her land is already mortgaged. A credit mobilier could provide Ms. Rodriguez with a loan, using her unencumbered farm equipment as security. This allows her to access necessary funds without further encumbering her real estate.

  This demonstrates a credit mobilier's function as it provides a loan to a borrower, and the collateral for that loan consists of personal property (the farm machinery), not real estate.

• Example 3: Retail Inventory Loan

  A clothing boutique, "Trendy Threads," wants to purchase a large volume of seasonal inventory for the upcoming holiday rush. The owner needs a short-term loan to cover the cost of these goods before they are sold. A credit mobilier could offer a loan to Trendy Threads, securing the loan with the very inventory of clothing and accessories that the boutique is purchasing. As the inventory sells, the loan is repaid.

  This example highlights a credit mobilier's role in providing financing where the security is the business's personal property, specifically its inventory, enabling the business to acquire goods for resale.