First Factoring Agreement Signed under the Joint Program of OTP Bank and USAID
OTP Bank and SVD-Distribution have signed the first agreement on the provision of factoring services under the joint program of OTP Bank and the USAID Investment for Business Resilience Activity (formerly USAID Financial Sector Reform Activity) to support financing of Ukrainian businesses.
The factoring agreement provides for financing in the amount of UAH 20 million for the supply of products by SVD-Distribution LLC to the Ukrainian retail chain of household appliances and electronics.
«Our company was founded in difficult times — in November 2022. We decided not to postpone the implementation of the new project. Given our experience, the project is evolving, creating new jobs (the staff of 16 people), we are gaining momentum and plan to grow in 2024, including due to the OTP Bank- USAID program. The financial support, namely factoring services on special terms, which we receive under the OTP-USAID program, will help us replenish our working capital for the supply of household appliances to the chain of stores and provide additional resources and opportunities for further development. As logistics chains are becoming longer, this is the type of financing instrument that our project needs,» said Natalia Teslenko, CEO of SVD-Development LLC.
Olga Volkova, Director of Corporate Sales to Small and Medium Clients of OTP Bank, said that a significant number of corporate clients, especially large companies, when signing agreements with suppliers, ask for a certain delay in payments for the delivered goods, which can reach as much as 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 disbursement from the Bank immediately after delivery, without waiting for the buyer to pay. This is an effective means of quick replenishment of working capital, which, I would like to emphasize, does not require any collateral. It is especially beneficial and convenient for MSMEs, and an interest rate subsidy under the OTP-USAID program makes it even more cost-effective. Therefore, companies that provide a deferred payment 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 pointed out.
USAID IBR increases the supply of finance to enterprises by working with a wide-range of financial intermediaries, including banks, leasing, insurance companies and others, that mobilize funds and channel them for effective investments. «We help unlock access to financial products for MSMEs on reasonable terms to support their businesses. We facilitate access to affordable factoring financing within our joint program with OTP Bank as this instrument has been successfully used in Europe and other parts of the world. It improves business cash flow and frees up funds tied up in unpaid invoices. IBR is looking forward to more factoring deals and will continue supporting the development of factoring market in Ukraine», said Yulia Vitka, Acting Chief of Party of USAID IBR.
