Business news from Ukraine

First factoring agreement signed under joint program of OTP Bank and USAID

OTP Bank and SVD-Development LLC have signed the first agreement on provision of factoring services under the joint program to support financing of Ukrainian business between OTP Bank and the USAID Project “Investments for Business Sustainability” (formerly USAID Financial Sector Reform Project).

The factoring agreement provides for financing in the amount of UAH 20 million for the supply of products by SVD-Distribution LLC to the network of a Ukrainian retailer of household appliances and electronics.

“Our company was established in difficult times – in November 2022. We decided not to postpone the implementation of the new project. Given our experience, the project is developing, creating jobs (16 people), gaining momentum, and we plan to grow in 2024, including through the OTP Bank and USAID program. Providing financial support, namely factoring on special terms, which we receive under the OTP Bank and USAID program, will help us replenish working capital for the supplied household appliances to the chain of stores and provide additional resources and opportunities for further development. Given the lengthening of logistics chains, our project needs just such a financing instrument,” said Natalia Teslenko, Managing Director of SVD-Distribution LLC.

Olga Volkova, Director of the Sales Department for Medium and Small Corporate Clients of OTP Bank, said that a significant number of corporate clients, especially large companies, when concluding agreements with suppliers, ask for a certain delay in payments for the delivered goods, which can reach 90 days and significantly increases the need for working capital for their partners. “Factoring allows the supplier to receive funds for its goods in the form of a tranche from the Bank immediately after delivery, without waiting for the buyer to pay. This is an effective means of quickly replenishing working capital, which, I emphasize, does not require collateral. It is especially beneficial and convenient for MSMEs, and partial compensation of the interest rate under the OTP Bank’s program with USAID makes it even more economically attractive. Therefore, companies that provide deferred payments for the supply of their goods and need working capital to finance such cash gaps are welcome to apply to the Bank and receive financing at a reduced interest rate,” she emphasized.

The USAID Project “Invest for Business Resilience” increases the supply of financing for businesses by working with a wide range of financial intermediaries, including banks, leasing, insurance companies and others, who raise funds and channel them into effective investments. “We help to unlock access to financial products for MSMEs on acceptable terms to support their businesses. As part of our joint program with OTP Bank, we facilitate access to affordable factoring financing, as this tool has been successfully used in Europe and other parts of the world. It improves business cash flow and frees up funds associated with unpaid invoices. The Business Resilience Investment Project expects to increase the number of factoring transactions and will continue to support the development of the factoring market in Ukraine,” said Yulia Vitka, Acting Chief of Party of the USAID Business Resilience Investment Project.

To learn more about SME factoring financing under the joint program of OTP Bank and USAID, as well as to apply for the service, please follow the link.

, ,