“The new products we offer are more profitable than traditional business loans”
In recent years, the development of small and medium-sized businesses in the country is of great importance. All necessary conditions for more efficient and transparent work have been created for entrepreneurs. Inevitably, there is a great need for a channel of financing for the growth of entrepreneurship. For this reason, Kapital Bank launches new products and conducts a number of campaigns to finance entrepreneurs. Farid S. Hidayatzada, Chief Corporate Sales Officer at Kapital Bank, answered questions about product conditions and innovations.
- Mr. Hidayatzada, what do Kapital Bank's newly launched “Financing of trade operations” products cover and who they are provided for?
- First of all, I would like to note that financing of trade operations consists of three products - factoring, sales financing, and pre-procurement financing. These products can be easily used by both legal entities and individual entrepreneurs. In particular, we provide affordable market conditions for these products taking into account our main target customers engaging small and medium-sized enterprises (SMEs). We tested our first factoring product during the year of 2018. Given the success of the results and the high demand for these products in the market, we have started mass sales.
- What are the essence and benefits of factoring, sales financing and pre-procurement financing products you mentioned earlier?
- Above all, I would like to point out that these products provide customers with easy and quick access to working capital. Thus, when using Factoring and Sales financing products, the seller can obtain up to 90% of the sales value by the Kapital Bank, without waiting for the buyer to pay for the goods sold. When using Pre-procurement financing product, the seller may obtain pre-financing for the goods or works to be procured by applying to the Kapital Bank on the basis of the contract with the buyer or the purchase order received from him.
Regarding the benefits of financing trade operations products, it is important to mention that there are no collateral requirements. Besides, the seller receives up to 90% of the sale value from Kapital Bank to continue his business and offer more competitive products. There are also some other advantages such as no prepayment requirement by the buyer, and the absence of exchange rate changes, inflation and liquidity risks.
I would like to give some simple examples to make it more understandable. For example, a businessman makes sales worth 10,000 Manat. But there is an agreement with the client that the cost of goods must be paid after 90 days. In this case, the entrepreneur may apply to the Factoring or Sales financing products by contacting Kapital Bank with documents confirming the sale. As a result, he will receive up to 90% of 10,000 Manat, or 9,000 Manat, without waiting for 90 days. The rest will be received by the buyer upon payment.
Or imagine that the entrepreneur has received an order from a very important customer with a value of 50000 Manat. But there is currently not enough money to complete this order. In this case, an entrepreneur can receive a pre-procurement financing product by contacting Kapital Bank together with documents confirming this order. An order can be easily completed after receiving up to 90% of the cost, that is, 45,000 Manat. And the buyer, in turn, pays the full cost of the order after completing the order, without advance payment.
- So why should customers use these products and not the business loan that they know best?
- Of course, customers can also use business loans. However, in this case, to obtain a loan requires more information about the client and more documentation. The process of obtaining a loan with an assessment of the financial situation takes some time. Time, as we know, is the most valuable resource in business. Furthermore, the absence of collateral requirements provides an additional benefit to the product.
- For which customers, in general, do you find Financing of trade operations products most attractive?
- I think these products are suitable for customers in the SMEs segment. Because flexibility and the search for new reliable trading partners is one of the key factors for customers in the small and medium business segment. These financing tools can also help our customers develop flexibility and secure business relationships. At the same time, one of the main problems in finding financial resources for relatively small enterprises is collateral requirements which are absent in Financing of trade operations products.
- What are your expectations, as Kapital Bank, from the customers in the provision of these products?
- The use of Financing of trade operations products is possible for transactions that are officially conducted by customers. One of our expectations from the customers is the availability of transparent accounting systems and their efficient application. Availability of a transparent accounting system will make these products more accessible to our customers. At the same time, reforms in the tax system of our country will encourage entrepreneurs to switch to transparent accounting and make a positive contribution to the country's economy as a whole.
- What other products does Kapital Bank offer for SMEs segment, which has recently appeared as a priority area in the country?
- Kapital Bank attaches great importance to the development and financing of small and medium-sized businesses. Special centers have been established in several branches of the Bank to provide better banking services to SMEs customers. In addition, SMEs customers are offered discounts and treasury services, remote banking, business loans, salary projects, business cards, collection and documentary services - guarantees and letters of credit.
I would also like to mention that we have a campaign for entrepreneurs starting new partnerships with Kapital Bank in February and March 2019. In accordance with the conditions, opening an account, issuing a business card, as well as installing a POS terminal- are provided to entrepreneurs who have applied to our branches for free. In addition, every 100 entrepreneurs applying to us will also receive a gift coupon in the amount of 100 Manat.
Finally, I would like to note that we will soon begin mass sales of Business Overdraft product. This product, in turn, will allow our customers to make payments, even if there are not enough funds on the transaction accounts that they want to deliver.