OREANDA-NEWS. July 11, 2017. Small companies supplying goods and services to public sector-related entities will benefit from a discount of invoices at favourable rates, a diversification of funding sources and a reduction in days of sales outstanding.

Spanish SMEs and midcaps working with public sector companies will be able to benefit from improved access to liquidity via an innovative supply chain financing programme that Farmafactoring Espa?a (FFE) will implement in Spain thanks to the financial support of the European Investment Bank (EIB). The EIB has granted a EUR 300m guarantee to FFE in the framework of the European Fund for Strategic Investments (EFSI), the central pillar of the European Commission’s Investment Plan for Europe (the so-called “Juncker Plan”). Roman Escolano, EIB Vice-President, and Massimiliano Belingheri, CEO of FFE and of BFF Banking Group, signed the agreement today in Luxembourg.

Farmafactoring Espana focuses its operations on discounting receivables against public administrations. The guarantee provided by the EIB will enable the company to extend its scope to include SMEs supplying goods and services to limited liability companies owned by the public sector. The agreement will contribute to providing risk protection for FFE on a new portfolio of trade invoices issued to SMEs and payable by selected public sector entities over a period of three years. This new platform will benefit SMEs by discounting their commercial invoices at favourable rates and by facilitating timely payment of their outstanding claims. As a result, SMEs benefiting from this financial instrument will diversify their sources of funding, improve their credit metrics and have additional resources to implement further investments.

The support of the Investment Plan for Europe has been crucial in extending the scope of traditional EIB loans for commercial companies owned by the public sector to an innovative operation concerning short-term trade payables. This is the first EIB supply chain operation with a specialised factoring operator.

At the signature event, EIB Vice-President Roman Escolano said: “SMEs account for over 70% of employment in Spain. The innovative agreement we are signing today will improve access to credit and working capital management for SMEs supplying goods and services to public sector entities. It will promote a new and alternative channel of financing for SMEs with attractive financial conditions. Financing these companies is a key pillar of EIB activity, as they are a central driver of economic growth and job creation’’.