Hitelgarancia stock of factoring guarantees reaches Ft 1 bln
The stock of guarantees on factoring contracts by Hitelgarancia Zrt, a majority state-owned guarantor of credit for SMEs, has risen dramatically to Ft 1 billion since it introduced the products in the spring, the company said on Friday.
Earlier Hitelgarancia only offered guarantees for corporate loans and bank guarantees. Demand for the new Hitelgarancia product has been focusing on factoring contracts that involve recallable advances on receivables. That is, suppliers must pay back any advance from factoring companies on receivables if the buyer fails to pay. Hitelgarancia undertakes to pay out up to 80% of factoring contracts in case of non-payment. The new product significantly reduces the risk for the factoring companies and encourage them expand their services. The potential clientele includes SMEs supplying large Hungarian or international companies but lacking the historic financial data, coverage or net assets required by factoring companies.
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