Have you ever heard the word Multifinance or leasing? If you've ever heard it once in a while, those two words really represent a Financing Company. The form of this financing company is quite a lot to be classified. However, in general, Financing Companies are part of the main players in the Financial Industry other than Banks. Based on data from the Association of Indonesian Financing Companies (APPI) as of August 2021, the total number of Multifinance/Leasing Companies throughout Indonesia is 167 companies. This number decreased when compared to April 2020, during the initial conditions of the Covid-19 pandemic.
What are the main activities of a financing company like? Then, where do the Financing Companies get their profits from? And what are the requirements needed to apply for a loan through a financing company? Check out the following review.
1. Definition of Financing Company
According to Otoritas Jasa Keuangan (OJK) through OJK Regulation Number 29/POJK.05/2014 Article 1 Paragraph 1, the definition of a financing company is a business entity that carries out financing activities for the procurement of goods and/or services. The business activities of the Financing Company include Investment Financing, Working Capital Financing, Multipurpose Financing, and other business activities approved by the OJK. Finance companies are regulated and supervised by the Financial Services Authority, under the Commissioner/Chief Executive of the Non-Bank Financial Industry (IKNB). In addition, as a forum for exchanging ideas and information for all Financing Companies in Indonesia, the Association of Indonesian Financing Companies (APPI) was established in the form of an official legal entity.
2. Types of Business Activities of Financing Companies
As explained above, the business activities of the Financing Company are divided into four, namely:
2.1 Investment Financing
Financing for the procurement of capital goods and services needed for business/investment activities, rehabilitation, modernization, expansion, or relocation of business/investment premises provided to debtors for a period of more than 2 (two) years.
2.2 Working Capital Financing
Financing to meet the needs of expenses that are exhausted in one cycle of the debtor's business activity and is financing with a maximum period of 2 (two) years.
2.3 Multipurpose Financing
Financing for the procurement of goods and/or services needed by the debtor for use/consumption and not for business purposes (productive activities) within the agreed period.
2.4 Other Business Activities Approved by OJK
In this case, the company is required to submit an application to the OJK by attaching a document containing a minimum description of the product to be marketed, analysis of business prospects, mechanism/method of financing to be carried out, rights and obligations of the parties, and sample financing agreement to be used.
Also Read: Apply for a Loan Through BFI Finance Now!
3. Financing Scheme
|Pembiayaan Modal Kerja
|Pembiayaan Multiguna (Konsumtif)
|Kegiatan Usaha Lain yang Disetujui OJK
|1. Sewa Guna Usaha
|1. Sewa Guna Usaha: Sales and Leaseback
|1. Sewa Guna Usaha
|Wajib mengajukan permohonan kepada OJK dan melampirkan dokumen terkait
|2. Anjak Piutang with Recourse
|2. Anjak Piutang with and without Recourse
|2. Installment Financing
|3. Installment Financing
|3. Fasilitas Modal Usaha
|4. Pembiayaan Proyek
|5. Pembiayaan Infrastruktur
In carrying out its financing activities, the Financing Company undertakes several common financing schemes or methods, namely:
3.1 Lease Financing
Finance Lease is a financing activity in the form of providing goods by a Financing Company to be used by debtors for a certain period of time, which substantially transfers the benefits and risks of the goods being financed. Example: Financing for heavy equipment, machinery, trucks, cars, and motorcycles.
3.2 Sales and Leaseback
Sales and Leaseback is a financing activity in the form of selling an item by a debtor to a Financing Company accompanied by leasing and refinancing the item to the same debtor. Example: Financing of heavy equipment, machinery, trucks, ships.
Factoring is a financing activity in the form of the purchase of trade receivables of a company and the management of these receivables.
3.3 Purchase With Installment Payment
Purchase with Payment in Installment is a financing activity in the form of procurement of goods or services purchased by the Debtor from the provider of goods or services with payment in installments. Purchases with installment payments can be used for Investment Financing and Multipurpose Financing. Financing with this method is also known as Installment Financing. Example: Financing property, cars, and motorcycles.
3.4 Project financing
Project Financing is financing provided for the implementation of a project that requires the procurement of several types of capital goods and/or services related to the implementation of the project. Financing with this method can be used for investment financing, such as factory construction, warehouse expansion, office building renovations.
3.5 Infrastructure Financing
Infrastructure Financing is financing in the form of procurement of goods and/or services for infrastructure development.
3.6 Business Capital Facility
Business Capital Facility is a Working Capital Financing that is paid directly by a Financing Company to a provider of goods or services. Example: Financing for heavy equipment, machinery, trucks, business capital loans.
3.7 Other Business Activities
Financing Companies can also finance the following business activities, such as:
3.7.1 Consumer Finance
- Motor Vehicle Financing
- Financing household appliances
- Financing of electronic goods
- Housing financing
3.7.2 Credit card
The definition of Credit Card Business is regulated in Article 1 letter e, Minister of Finance Regulation Number 84/PMK.012/2006 concerning Financing Companies. “Credit Card Business is a financing activity for the purchase of goods and/or services using a credit card.
4. Sources of Funding and Fees
In contrast to banks, financing companies are not allowed to withdraw funds directly from the public (current accounts, savings, time deposits) and provide guarantees. Thus, the sources of funding for the Financing Company come from:
- Bank (bilateral loan, joint financing, channeling)
- Shareholders Deposit Authorized Capital, Issued Capital
- Issuance of Shares, Bonds
- Debt to Parent Company
- Retained earnings
4.1 Costs that arise in the business activities of the Financing Company:
- Interest payments to creditors (Banks)
- Marketing Cost
- Labor costs
- Operating costs
- Tax costs
5. Then, where do the Financing Companies get the Profits?
Multifinance business profits are obtained from the difference between interest charged to consumers (lending rate) and borrowing rate. Apart from the sources of profit above, the benefits of multi-finance businesses are obtained from:
- the difference in insurance costs
- administrative costs
6. Requirements Documents Apply for Financing
For example, if a prospective debtor wants to apply for a business capital loan or investment financing with a car or motorcycle BPKB guarantee, the following are the requirements:
- KTP and Family Card
- TIN or Tax Return
- Mutation Account for the last 3 months
- Employee Salary Slip or Income Certificate
- Guarantee Documents (STNK, Taxes, BPKB, Invoices)
- Domicile Data (Electricity PEL ID / Latest electricity account / Latest PBB / SHM / AJB / PK)
However, in general, to apply for all types of financing, especially consumer financing, these documents are common and often used.
7. Submit Your Financing with BFI Finance
After knowing briefly about a financing company, don't hesitate to apply for financing, especially for business capital loans, investment, education, and others through BFI Finance. BFI Finance has been established in 1982 and became the first financing company in Indonesia to list its shares on the Indonesia Stock Exchange.
With BPKB guarantees for cars, motorcycles, heavy equipment, and industrial machinery, as well as a House Certificate, you can get a loan for business capital or other needs with a low-interest rate and fast approval.