Forfaiting Guarantee
Supplementary cover for exporters
Forfaiting Guarantee - Increased
cover ratio for more liquidity
As one of six measures within the package of measures for Export Credit Guarantees, the new Forfaiting Guarantee offers an increased cover ratio of 95%. Furthermore, this product is now also available to selected trading companies as a refinancing option. In addition, the inflow of liquidity can be achieved earlier. The improved guarantee makes it easier for export and trading companies to sell receivables, allowing them to offer their customers abroad longer payment terms. This strengthens their negotiating position in international competition. The sale of receivables enables an early inflow of liquidity for companies and can thus relieve their credit lines. The intended balance sheet-relieving effects benefit small and medium-sized companies in particular.
Advantages of the optimized Forfaiting Guarantee
The package of measures makes the Forfaiting Guarantee more attractive, especially for medium-sized manufacturing export and trading companies. With improved conditions and extended utilization options, we offer you a forward-looking solution for your export financing.
- Increased cover ratio: The cover ratio will be increased from the previous 80 percent to 95 percent, so that in future there will be uniform, guarantee-like cover in favor of the buyer.
- Earlier liquidity: Export companies can already receive the pro rata forfaiting purchase price after the respective delivery or service and before the export transaction has been fully executed.
- Extended use: Trading companies with comparable product proximity and market experience as manufacturing companies can use the Forfaiting Guarantee.
- Facilitated refinancing: The refinancing of forfaiting supplier credits through covered bonds (Pfandbriefe) is simplified.
Why the Forfaiting Guarantee has been optimized
The increase in the cover ratio and the extended usage options make forfaiting more attractive for banks, which can have a positive effect on the conditions for export companies.
- More attractive conditions: Improved conditions for banks and export companies due to increased cover ratio.
- Earlier liquidity inflows: Export companies benefit from earlier purchase price payments.
- Use by trading companies: Trading companies can now also benefit from forfaiting, provided they have the relevant product proximity and market experience.
We support you with the financing of your foreign business
In order to remain internationally competitive, a good product is often not enough – exporters must be able to offer attractive payment conditions or a financing package. If the buyer wishes long-term financing for the phase after delivery or commissioning, supplier credits will tie up the exporter’s liquidity for a long time. As an alternative to arranging a buyer credit and payment of the exporter by a bank, the exporter can sell (forfaiting) and cede the supplier credit receivables in order gain liquidity.
The Federal Government facilitates the forfaiting of export receivables
A Forfaiting Guarantee makes it easier for a German exporter to finance his receivables resulting from a single export transaction by means of obtaining improved conditions of cover (enhancement of an insurance product to a guarantee-like product) in favour of the assignee (credit institution or forfaiting company) for the amount of the insured percentage (95%). (The product is available for a limited period of time until 30 June 2026.)
Worth knowing: The Forfaiting Guarantee supplements a Supplier Credit Guarantee.
Forfaiting Guarantee at a glance
Target group
- as applicant:
- German manufacturing companies with export experience
- Trading companies with eligible business
Target group
- As applicants:
- German manufacturing companies with export experience
- Trading companies with eligible business
- As beneficiary:
- German credit institutions
- German branches of foreign credit institutions
- foreign banks domiciled in a country which is a member of the European Economic Area (= EU, Iceland, Liechtenstein, Norway) or in Switzerland
- certain German forfaiting / factoring companies
Payment terms
- short-term (up to 2 years)
- medium/long-term (2 years and longer)
Insurable risks
Receivables from the cross-border delivery of goods or provision of services having a contract value of up to EUR 10 million (or the euro equivalent)
Special features
Exporters can apply for a Forfaiting Guarantee in addition to a Supplier Credit Guarantee for an export transaction. In forfaiting operations, the exporters cede supplier credit receivables covered by Federal Export Credit Guarantees to forfaiters (credit institutions or forfaiting companies, hereinafter: credit institutions). The Supplier Credit Cover protects them against the credit risk, i.e. the risk of default for commercial or political reasons, in respect of the covered receivables. Nevertheless, the credit institution is still faced with the risks of legal validity and beaches of obligations by the exporter (legal enforceability risks).
With the Forfaiting Guarantee, the Federal Government grants the beneficiary, i.e. the credit institution, a guarantee-like claim for compensation in respect of for 95 percent of the respective receivable. This guarantee-like claim exceeds the exporter’s claim for indemnification in substance. The credit institution obtains a direct claim for payment even if the legal enforceability risks have materialised. This claim is only subject to specific obligations to be performed by the credit institution (in particular a plausibility check regarding the performance of the export transaction) and can already be asserted by the credit institution one month after the payment default. Any breaches of obligations on the part of the exporter do not preclude indemnification. In this context the credit institution submits the export contract, evidence that the down-payment was made and a commercial invoice to the Federal Government in the event of a loss.
Once the regular waiting period under the Supplier Credit Guarantee (normally 6 months) has expired, the regular loss assessment procedure will be completed. If all necessary documents are available to the Federal Government, the loss will be calculated within 2 months. The indemnification amount will then be paid within one further month.
The Forfaiting Guarantee now also covers debt withdrawal risks, which is a key component for use in refinancing through covered bonds. This favorable refinancing option increases the attractiveness of forfaiting for banks and thus improves the conditions for export companies
Principle: exports to all countries
- Exception: Exports with credit periods of up to two years to EU and core OECD member states (i.e. EU countries, Canada, Iceland, Japan, New Zealand, Norway, Switzerland, United States and United Kingdom); a condition for the issue of a Forfaiting Guarantee is that the exporter must have experience with exports to the buyer country (under certain circumstances in the same region / same jurisdiction is sufficient)
Premium
- One-off premium amounting to a certain percentage of the covered order value (excluding interest), no administrative fees, payable by the exporter
Uninsured portion
- 5% of the ceded amount receivable with regard to the risks of the legal validity and breaches of obligations (can be passed on to the exporter);
In any case, the uninsured percentage under the ceded Supplier Credit Guarantee amounts to 5% for political risks and 5% for commercial risks (may not be passed on to the exporter)
Model clause – The Federal Governments right of recourse against the exporter under the Forfaiting Guarantee (FFG)
Forfaiting Guarantee: Your advantages at a glance
Safe
- Sale of receivables to relieve the pressure on the balance sheet
- Freeing up of liquidity
- Making the granting of repayment periods to foreign buyers possible
Enhanced
- The Forfaiting Guarantee enhances Supplier Credit Cover. The legal validity of the supplier credit claim and of any collateral is not a prerequisite for indemnification under the Forfaiting Guarantee.
- Any failure of the part of the exporter to comply with its obligations (in accordance with Art. 15 of the General Terms and Conditions (G)) does not release the Federal Government from its liability.
- The waiting period in the case of protracted default is reduced from 6 months to one month.
- The claim settlement period is reduced from 2 months to one month.
Digital
You as exporter can submit the application for a Forfaiting Guarantee trouble free in our customer portal myAGA.
Applying for a Forfaiting Guarantee
You as exporter can apply for a Forfaiting Guarantee quite easily online via the myAGA customer portal (DE). For this purpose, please register once and comfortably with just a few steps with our myAGA customer portal (DE). If you already use myAGA, you can log on directly with your access data.
This is possible even if the credit institution that will buy the receivables is not yet known.
If you need assistance with the application or if you have any questions regarding the suitable product for you, please do not hesitate to contact our business consultants.
Download Brochures
FAQs – Forfaiting Guarantee (FFG)
What requirements must be met for a Forfaiting Guarantee?
The prerequisites for a Forfaiting Guarantee are that the Federal Government has assumed Supplier Credit Cover for the export transaction and that the exporter assigns the corresponding export claim and his claims under this cover to a forfaiter. The Forfaiting Guarantee can only exist in combination with Supplier Credit Cover. The conditions of the Supplier Credit Cover, which is structured as an insurance product, are upgraded by the Forfaiting Guarantee in favor of the forwarder to a claim similar to a guarantee directly against the Federal Government.
What is covered by a Forfaiting Guarantee?
The Forfaiting Guarantee protects the forfaiter as the beneficiary (and not the exporter) against the risk of not receiving any indemnification under the assigned Supplier Credit Cover for reasons beyond its control. This is the case, for example, if entitlement to indemnification is denied because the exporter’s claim for payment against the foreign debtor is not legally valid (enforceability risk).
In what way does an Forfaiting Guarantee enhance Supplier Credit Cover?
The Forfaiting Guarantee improves the protection offered under Supplier Credit Cover. With the declaration issued by the Federal Government consenting to the assignment of the export receivable and the claims under the guarantee in favour of the forfaiter, individual provisions of the Supplier Credit Guarantee are deemed to be non-applicable or are amended.
This particularly includes the following aspects:
- The legal validity of the supplier credit claim and of any collateral is not a prerequisite for indemnification (Art. 5 (1) Sentence 1, (2) and (3) of the General Terms and Conditions (G)).
- Any failure on the part of the exporter to comply with its duties in accordance with Art. 15 of the General Terms and Conditions (G) does not release the Federal Government from its liability.
- The waiting period in the case of protracted default is reduced from 6 months to one month.
- The claim settlement period is reduced from 2 months to one month.
The details are governed by the Special Conditions for the Consent of the Federal Government to the Assignment of Covered Supplier Credit Receivables with Enhanced Cover in Favour of the Assignee (Special Conditions (FFG)).
For what transactions is an Forfaiting Guarantee available?
An Forfaiting Guarantee can be granted for the delivery of goods / the provision of services with an order value of up to EUR 10 million (or the euro equivalent) for which Supplier Credit Cover with an uninsured percentage reduced to 5 percent for commercial risks (95 percent cover) has been provided. Service-only transactions are excluded.
The granting of cover is contingent upon a positive performance check for the exporter determined on the basis of the self-disclosure form completed for the Forfaiting Guarantee.
The Forfaiting Guarantee is available for export transactions if the exporter already has a successful business relationship with this customer. An Forfaiting Guarantee can only be granted for business with new foreign customers if the exporter has experience with the Federal Government’s Export Credit Guarantees and can also demonstrate that it has sufficient experience of the intended foreign market (e.g. including through uncovered business).
What is the cover ratio for the forfaiter under the Forfaiting Guarantee?
Credit risks under the Supplier Credit Guarantee in favour of the forfaiter remain subject to a cover ratio of 95 percent. The guarantee-like claim under the Forfaiting Guarantee is capped at 95%.
Who can apply for a Forfaiting Guarantee?
The application for an Forfaiting Guarantee must be submitted by the exporter. The Forfaiting Guarantee can be issued either together with the Supplier Credit Guarantee or at a later date. An application is still possible even when the covered supplier credit has already entered the repayment phase.
If the export contract has not yet been entered into, the applicant initially receives a legally binding offer of cover. The exporter can use this offer of an Forfaiting Guarantee in the negotiation process for the sale of the receivable. The forfaiter is not involved in the Forfaiting Guarantee cover process. After the export contract has been signed, cover is granted by the Federal Government for the supplier credit together with the Forfaiting Guarantee. The Forfaiting Guarantee takes effect when the Federal Government has received the exporter’s notice of assignment together with the forfaiter’s consent to the Special Conditions (BB-FFG).
Who can be a beneficiary under an Forfaiting Guarantee?
The following parties can be beneficiaries:
- Credit institutions domiciled in a country which is a member of the European Economic Area (EEA) or in Switzerland; or
- Domestic financial services companies which have a licence issued by the German Federal Financial Supervisory Authority (BaFin) allowing them to buy receivables on a recurring basis under master contracts in accordance with Art. 1 (1) No. 2 of the Supplementary provisions relating to the assignment of Guaranteed Amounts – GC (FAB).
What conditions must be met for the sale of receivables?
The Federal Government’s consent to the sale of the covered export receivables subject to cover enhancement is particularly contingent on the following conditions:
- The forfaiter must purchase 100 percent of the covered export receivable.
- The uninsured percentage totalling 5 percent for political and commercial risks (under the Supplier Credit Guarantee) may not be passed on to the exporter. However, it is still possible to cover the uninsured percentage of 5 percent for the additional risks covered with the Forfaiting Guarantee by alternative means.
What are the parties’ obligations in this triangular constellation?
The exporter is the policyholder under the Supplier Credit Guarantee with all rights and obligations. It must ensure that it is able to fulfil its obligations independently of the forfaiting transaction. The forfaiter is not a policyholder. The Forfaiting Guarantee has a guarantee-like structure for the benefit of the forfaiter. Accordingly, the forfaiter’s own obligations are confined to those actions that it can control itself. These particularly entail the obligation for the forfaiter to satisfy itself with the diligence dictated by sound banking practice that the exporter has submitted evidence confirming that the deliveries/services have been made to the foreign customer before disbursing the forfaiting proceeds.
When and how is indemnification paid?
If any payment default arises under a transaction covered by the Forfaiting Guarantee, the forfaiter will on request receive indemnity of 95 percent of the covered receivable one month after the due date and a further claim examination period of one month. In this respect, it is irrelevant whether a credit or a legal enforceability risk has arisen with respect to the outstanding receivable. This is an upfront abridged indemnification procedure. For this purpose, the forfaiter must submit a form confirming the disbursement requirements, among other things.
The subsequent usual loss assessment process determines whether or not an indemnification claim exists under the Supplier Credit Guarantee.
Otherwise, the forfaiter continues to receive indemnification for continuing maturities under the Forfaiting Guarantee, although no indemnity is paid under the Supplier Credit Guarantee. Since such a loss, which is not indemnifiable under the Supplier Credit Cover, falls within the exporter’s sphere of risk, the Federal Government has a corresponding right of recourse against the exporter.
How is the right of recourse against the exporter structured?
As a rule, the German Federal Government will only exercise its right of recourse when and as soon as it has rejected indemnification under the Supplier Credit Guarantee. However, the exporter must cooperate in the indemnification procedure and provide the necessary documentation. If it fails to duly comply with this duty, the right of recourse may be asserted on a correspondingly earlier date.
What does the Forfaiting Guarantee cost?
The exporter is charged a variable additional premium for the issue of an Forfaiting Guarantee on top of the premium for the underlying Supplier Credit Guarantee. No insurance tax is payable.
An interactive tool is available on the Internet for calculating the premium. Further information can be found in the brochure "Fees and premium rates".
How do I obtain cover?
Contact with the Federal Government is established via Euler Hermes Aktiengesellschaft.
The employees of Euler Hermes AG in Hamburg as well as at the numerous regional offices will be pleased to answer any additional questions you may have. Information material and the Special Conditions (FFG) can also be viewed and downloaded at under Downloads.
