Guaranteed factoring combines factoring with recourse with the guarantee of the Central Guarantee Fund, which covers up to 60% of the amount of the loan (in accordance with the Liquidity Decree, the coverage rises to 90% until 31/12/2020).
The Guarantee Fund (Law 662/96) is a public guarantee established by the Ministry of Economic Development (MISE), the purpose of which is to facilitate access to credit for businesses, replacing or accompanying guarantees of another nature and reducing the risk of the financing party on the guaranteed amount.
The company transfers its trade receivables to the bank, while remaining responsible for the risk of customer insolvency. The Bank, in addition to handling the collection of the trade receivables and possibly paying the amount in advance, takes care of the formalities necessary to access the guarantee of the Fund, providing the company with all the support it needs.
The product is aimed at small and medium-sized enterprises – as defined by European legislation -, including national artisan businesses that are economically healthy and belong to any sector, with the exception of those deemed sensitive by the European Union that want to outsource the management of their trade receivables to a specialised operator, and who wish to possibly finance their working capital, for example during expansion and during periods of growth in turnover.
The possibility of guaranteeing financing with the intervention of the Central Guarantee Fund allows a smaller or newly established company to obtain all the financial support it needs, being able to present to the Bank also customers who normally do not accept the transfer of receivables or do not provide feedback on quality of the service provided.
Thanks to the factoring guaranteed by the Central Guarantee Fund you can:
- Obtain an advance on the transferred receivables and immediately have the liquidity necessary to finance the working capital;
- Improve the regularity and speed of the cash flow;
- Optimise the flow of payments and short-term collections;
- Concentrate on the commercial and productive aspects of the business, increasing competitiveness in your market.
Furthermore, thanks to the support of the Central Fund guarantee, the Bank’s credit risk is reduced: for this reason, the company is given a reduction in the financial cost of the transaction.