Expand the boundaries of your business with a special offer aimed at promoting exports from Armenia to the EU countries, the USA, China, the UAE, and other new destinations.
The Export Factoring Campaign is valid from July 17 through September 30, inclusive.
Financing against Assignment of Monetary Claims (Factoring) | Annual Interest Rate |
USD 6,9% | |
EUR 4,9% | |
Factoring Disbursement Fee | 0.3% of the invoice amount, minimum AMD 5,000 |
Maximum Factoring Limit Set for the Customer | 0.15%, minimum AMD 25,000, maximum AMD 250,000 |
Maximum Term 36 months | |
Maximum Factoring Term | Up to 120 days. In individual cases, depending on the Debtor’s credit rating and market position, the maximum term may be up to 180 calendar days. |
Export factoring is provided for up to 80% of the invoice amount if it is not secured by EIA insurance or a guarantee/letter of credit issued by another bank; up to 95% if it is secured by EIA insurance or a guarantee/letter of credit issued by another bank and the export is carried out in the currency of the export contract; and up to 85% of the invoice amount if the export is carried out in a currency different from the currency of the export contract.
Factoring is provided to resident legal entities and individual entrepreneurs of the Republic of Armenia that have been engaged in continuous economic activity for at least 3 months in the trade sector, 6 months in the manufacturing sector, and 12 months in the construction sector.
The Customer or a Related Party and the Debtor must have maintained a business relationship for at least 3 months, except for export factoring provided with EIA insurance (International Factoring Insurance) or a guarantee or letter of credit issued by another bank acceptable to the Bank, in which case no minimum period is required.
Factoring is provided based on the factoring financing application-agreement submitted by the Customer and documents certifying the right to the assigned monetary claim.
No minimum financing amount is established.
The factoring amount is repaid by the Debtor, while the fee and interest are paid by the Customer, unless otherwise provided for by the Application-Agreement. The factoring amount and interest are paid by the Debtor from the amounts paid by the Debtor to the Customer.
After the Bank provides financing against the assignment of the Customer’s monetary claim and the Debtor fully fulfills its obligation within the established period, the Bank performs the final settlement on the same day and transfers to the Customer’s bank account the remaining (unfinanced) portion of the amount payable against the assigned monetary claim, less the accrued interest and penalty.
The following may serve as security for factoring: real estate, vehicles (cars), agricultural machinery, equipment, cash, other tangible assets, guarantees, guarantees issued by other first-class banks, financial flows, a guarantee or letter of credit issued by another bank in the currency of the factoring financing, and EIA insurance.
By decision of the Bank, factoring may also be provided without collateral.
In the case of collateralized factoring, the sum of the factoring amount and 12 months’ interest must not exceed 90.91% of the appraised value of the collateral.
Learn more:
List of Excluded and Activities Subject to Approval
Export Insurance Agency of Armenia (EIA)
The Bank establishes the maximum factoring financing limit for each Customer based on the Customer’s financial condition, solvency, sales volume, credit history, and the total price specified in the contract concluded with the Debtor for the supply of goods, performance of works, or provision of services.
Factors for rejecting the limit include insufficient financial indicators identified as a result of the analysis, the Customer’s poor credit history, insufficient/unavailable required security, the professional opinion of the Business Consultant, and the professional opinion of the Credit Committee.
A decision on the maximum factoring financing limit is made within 1-20 banking days after the Customer submits the application and the required package of documents.
The Bank’s decision is communicated to the Customer within 1 banking day.
The limit is provided within 1-5 banking days after the Customer submits the complete package of required documents and the collateralization process is completed.
After receiving the documents required for factoring, the Bank reviews them within 5 (five) business days and, having verified that the monetary claim is genuine, makes a decision on providing financing.
Within 1 (one) business day after making the decision to provide financing, the Bank transfers the Financing Amount to the Customer’s bank account.
Factoring is processed at the Bank’s Head Office and branches, except for the Komitas, Yeritasardakan, Teryan, Shinharar, Homplex Mall, Gyumri, Ashtarak, and Aragats branches. The full list of the Bank’s branches is available here.
Changes in the foreign exchange rate may affect factoring repayments if the financing is provided in a foreign currency.
For foreign currency factoring, the Annual Percentage Rate is calculated based on the exchange rate published on the official website of the Central Bank of the Republic of Armenia as of the loan disbursement date. The Annual Percentage Rate may change depending on changes in the exchange rate published on the official website of the Central Bank of the Republic of Armenia.
The Bank has the right, in the event of fluctuations in the interest rates of funds attracted and placed by the Bank in the financial market and/or changes in the financing interest rate and/or the existence of such prerequisites, to unilaterally change the interest rates and fees established under the Agreement by notifying the Customer and/or Debtor at least 30 calendar days in advance. The changes will apply from the date specified in the notice.
The Customer is liable to the Bank if the monetary claim that is the subject of the assignment is wholly or partially not genuine and, in the case of recourse factoring, also in the event of non-fulfillment or improper fulfillment of the obligation established by the Agreement.
If factoring is provided against a pledge of real estate, a vehicle, agricultural or other machinery, equipment, and the property is appraised at AMD 30 million or more, the property must also be appraised by a qualified independent appraiser cooperating with the Bank.
During the term of the Agreement, the loan account statement and other information required to be provided free of charge under the legislation of the Republic of Armenia are provided free of charge.
Statements not required to be provided under the legislation of the Republic of Armenia and duplicate statements are provided as follows:
for a period of up to 6 months (inclusive) - free of charge;
for a period of more than 6 months and up to 12 months (inclusive) - AMD 2,000 (including VAT);
for a period exceeding one year - AMD 3,000 (including VAT).
Upon request, information on the loan may be provided in the form of a certificate:
within the next business day following submission of the application - AMD 5,000; when applying through the acba digital system - AMD 3,000 (including VAT);
on the same business day, within 1 hour - AMD 7,000; when applying through the acba digital system - AMD 5,000 (including VAT);
within 1-4 business days via delivery service - AMD 6,000; when applying through the acba digital system - AMD 4,000 (including VAT).
In the case of collateralized factoring, the Customer may incur the following fees:
Real estate appraisal service fee: AMD 5,000 and more, depending on the area and type of property;
Notarial service fee: AMD 3,000-15,000;
Fee for registration of the pledge right over real estate: AMD 2,000-25,000;
Fee for a unified certificate on restrictions over real estate: AMD 10,000;
Fees related to pledging other property: AMD 2,000-10,000.
Depending on various circumstances, the Bank may require additional documents and information. For the purpose of the Customer Due Diligence prescribed by the RA Law on Combating Money Laundering and Terrorist Financing, the Bank may, based on the “Know Your Customer” principle, require additional documents or other information from the Customer and may also ask additional questions during verbal communication. If proper identification of the Customer or servicing of the accounts is impossible, access to the service provided by the Bank may be restricted. In addition, to determine whether You are a U.S. taxpayer, the Bank may collect additional information pursuant to the Foreign Account Tax Compliance Act (FATCA) and the agreement concluded with the United States.
The fee payable to the Bank for factoring is calculated on the entire amount of the monetary claim assigned to the Bank and is charged from the Customer’s or Debtor’s bank account at the time of factoring financing. If the factoring is repaid before maturity, the fee payable to the Bank is not subject to recalculation or refund.
The interest payable to the Bank for factoring is calculated on the outstanding financing amount for the actual term and is collected from the amount(s) directed by the Debtor toward fulfillment of the monetary obligation.
Assigned factoring amount: AMD 10,000,000
Factoring financing amount: 90% of the assigned amount
Factoring financing amount: AMD 9,000,000
Annual factoring interest rate: 14%
Factoring disbursement fee: 0.5%
Factoring term: 120 days
The daily accrued interest will be:
9,000,000 × 14% / 365 = AMD 3,452
The interest calculated for the entire term will be:
3,452 × 120 = AMD 414,247
The one-time factoring disbursement fee will be:
10,000,000 × 1% = AMD 100,000
The Customer is liable to the financial agent for the validity of the monetary claim that is the subject of the assignment, unless otherwise provided by the financing agreement against the assignment of a monetary claim.
The monetary claim that is the subject of the assignment is considered genuine if the Customer has the right to transfer the monetary claim and, at the time of assignment, is not aware of any circumstances by virtue of which the Debtor has the right not to fulfill the claim.
The Customer is not liable for the Debtor’s failure or improper fulfillment when the financial agent presents the assigned claim to the Debtor for fulfillment, unless otherwise provided by the agreement concluded between the Customer and the financial agent.
If, under the terms of the financing agreement against the assignment of a monetary claim, the financial agent finances the Customer by purchasing the claim from the Customer, the financial agent acquires the right to the entire amount that it is to receive from the Debtor in fulfillment of the claim, while the Customer is not liable to the financial agent for the fact that the amount received by the latter was less than the price at which the agent acquired the claim.
If the monetary claim was assigned to the financial agent to secure the Customer’s obligation to the financial agent and the financing agreement against the assignment of the claim does not provide otherwise, the financial agent must provide the Customer with an account and transfer to the Customer the portion exceeding the amount of the debt secured by the assignment of the Customer’s claim. If the funds received by the financial agent from the Debtor are less than the amount of the debt secured by the assignment of the Customer’s claim, the Customer remains liable to the financial agent for the outstanding balance of its debt.
If the Customer breaches its obligations under the agreement concluded with the Debtor, the Debtor has no right to demand from the financial agent the return of amounts already paid to the latter against the transferred claim if the Debtor has the right to receive such amounts directly from the Customer.
A Debtor entitled to demand directly from the Customer the amounts paid to the financial agent as a result of the assignment of the claim may nevertheless demand those amounts from the financial agent if the Debtor proves that the financial agent did not pay the Customer the amount against the assignment of the claim or paid it while knowing about the Customer’s breach of an obligation toward the Debtor to which the payment related to the assignment of the claim concerns.
Receiving information electronically is the most convenient option. It is available 24/7, eliminates the risks associated with the loss of paper information, and ensures confidentiality.
If the Debtor fails to make payments within the time limits and in the amounts established by the factoring agreement and/or application-agreements, the Bank has the right to charge a penalty on the outstanding monetary obligations, which may not exceed 0.13% (zero point thirteen percent) for each day.
If the Customer or Debtor fails to fulfill or improperly fulfills the payment obligations established by the factoring agreement, the Bank has the right to charge a penalty on the outstanding monetary obligations, which the Bank determines unilaterally and which may not exceed 0.13% (zero point thirteen percent) for each day.
See below:
Penalties applicable in case of late fulfillment of obligations by the Borrower.
Qualified independent appraisal companies cooperating with the Bank.
When payments are made on or after the final deadline for fulfillment of obligations, payments are applied in the following order: penalties calculated on the loan amount, interest and/or fees; overdue interest; overdue fees; overdue loan principal; and thereafter interest, fees, and loan principal.
Payments made before the final deadline for fulfillment of obligations are applied toward reducing the loan principal unless there is a scheduled repayment instruction or an overdue obligation under the Agreement, in which case payments are made in the order described above.
The pledged property may be foreclosed if the Customer/Debtor fails to fulfill the obligations assumed under the Agreement on time. If the value of the collateral is insufficient, the Customer’s/Debtor’s obligations will be repaid from other property of the Customer/Debtor.
In the case of recourse factoring provided by the Bank, where the Customer bears the risk of the Debtor’s non-payment against the assigned monetary claim, the claim for fulfillment of the factoring obligation is presented to the Customer and, where necessary, also to the Debtor.
In the case of non-recourse factoring provided by the Bank, where the Customer does not bear the risk of the Debtor’s non-payment against the assigned monetary claim, the claim for fulfillment of the factoring obligation is presented to the Debtor.
ATTENTION: If you fail to fulfill or improperly fulfill your obligation, the Bank sends this information to a credit bureau, where your credit history is formed. You have the right to obtain your credit history from the credit bureau free of charge once a year.
ATTENTION: A poor credit history may prevent you from obtaining a loan, factoring, or any other product involving financing by the Bank in the future.
1. How does factoring differ from a loan?
A loan is provided for a specific fixed term, whereas factoring is provided for the actual number of days by which payment is deferred.
Loan funds are repaid by the borrower, whereas the factoring amount is repaid from the amount paid by the debtor.
In the case of a loan, collateral security is generally required, whereas in factoring, the monetary claim serves as the security.
Unlike borrowed funds, factoring financing is not reflected on the balance sheet as borrowed funds.
In lending, the borrower’s solvency is the primary consideration, whereas in factoring financing, the solvency of the buyers is the primary consideration.
Loan funds are generally provided in one or two installments, whereas factoring financing is provided as needed.
Lending does not involve the provision of other services, whereas factoring is not merely financing but a combination of additional services.
2. Who is recourse factoring intended for?
Recourse factoring is intended for those who trust their buyers and therefore do not need to pay for the more expensive option (recourse factoring is less expensive).
3. Will buyers be concerned that the seller has started using factoring?
Reliable buyers who meet their payment deadlines can only have a positive attitude toward factoring. It should also be noted that, thanks to factoring, sellers can often provide buyers with longer payment deferrals. Factoring is beneficial not only for the seller but also for the buyer, as it allows the buyer to obtain trade credit, maintain a broad range of goods, and temporarily have additional free cash.
4. Can factoring be used in the services sector?
Certainly. Factoring can also be fully applied when services are provided with deferred payment terms.
5. What happens if the debtor does not pay for the goods supplied to them when the transaction has been financed through factoring?
If the buyer fails to make the payment, there are two possible scenarios, depending primarily on the type of factoring (recourse or non-recourse). In the case of recourse factoring, the seller is obliged to pay the Bank, on behalf of the buyer, the amount not paid by the buyer. In the case of non-recourse factoring, the Bank must independently resolve the issue of recovering the overdue obligation, assuming all associated risks.
6. Will the Bank provide factoring financing against an overdue receivable?
The Bank provides factoring financing exclusively against receivables that are not overdue.
7. What is the advantage of factoring over a loan?
In fact, this is not so much a matter of advantage as of the fact that they meet different customer needs. Factoring is primarily a tool that enables an increase in sales volumes without the risk of an increase in overdue receivables from buyers.
