The document discusses two types of non-banking credit: leasing and factoring. For leasing, it distinguishes between operating and financial leases, noting that financial leases allow the lessee to eventually own the asset. Factoring involves a business selling its accounts receivable to a third party at a discount, and can be done with or without recourse for the factor. The document provides comparisons of key terms like pricing and financial disclosure treatment between these non-bank credit options and traditional bank loans.

1. Credit FinanceCREDIT AT NON-BANKING ORGANIZATIONS

2. 2Credit at Non-Banking Organizations
Leasing
Definition:
A legal document outlining the terms under which one party agrees to rent property
from another party. A lease guarantees the lessee (‫ر‬‫ر‬‫ر‬‫ر‬‫ر‬‫ر‬‫ر‬‫ر‬) use of an asset and
guarantees the lessor (‫ر‬‫ر‬‫ر‬‫ر‬‫ر‬‫ر‬) regular payments (rentals‫ر‬‫ر‬‫ر‬‫ر‬‫ر‬‫ر‬‫ر‬) from the lessee for a specified
number of months or years
Operating Lease Financial Lease
When the company will
never get the title of the
leased asset
When the company will get the title
(property / ownership) of the leased
asset (option to buy)
Residual value‫ر‬‫ر‬‫ر‬‫ر‬‫ر‬‫ر‬‫ر‬‫ر‬‫ر‬‫ر‬‫ر‬

3. 3
Leasing
Credit at Non-Banking Organizations
Tenor More than 1 Year More than 1 Year
Bank Loans Financial Leasing
Pricing Normal Higher -> Leasing Margin
Asset Property Client Lessor
Financing Ratio Around 50:50 Up to 100:0
Additional Costs Commissions, charges, fees Transfer of title
Financial Disclosure BS (FA & Liab.), P&L (Dep.) Off-Balance Sheet
Tax Benefits None Rentals are exempted
Purpose Finance fixed asset Finance fixed asset

4. 4Credit at Non-Banking Organizations
Factoring
Definition:
Factoring is a financial transaction where a business sells its accounts receivable
(i.e., invoices) to a third party (called a factor) at a discount
With Recourse Without Recourse
Factoring
Factoring
Direct Factoring Reverse Factoring

5. 5
Factoring
Credit at Non-Banking Organizations
Tenor Up to 1 Year Up to 1 Year
Bank ODA Factoring
Pricing Normal Higher -> Factoring Margin
Contract Coverage Several transactions Specific transaction
Financing Ratio Around 40%-80% W: up to 85% - W/t: 75%
Additional Costs Commissions, charges, fees Admin, collection fees
Financial Disclosure BS (CA & Liabilities) Off-Balance Sheet
Stamp Duty Taxable Exempted
Purpose Finance current asset Finance receivables

6. 6
Thankyou
Ahmed MOUSTAPHA
Manager – Corporate Finance
QNB ALAHLI Bank
am.moustapha3@gmail.com
Credit at Non-Banking Organizations

7. 6
Thankyou
Ahmed MOUSTAPHA
Manager – Corporate Finance
QNB ALAHLI Bank
am.moustapha3@gmail.com
Credit at Non-Banking Organizations