Factoring is an effective tool for SMEs financing - L. Zaika
Factoring financing is an effective and convenient tool that gives small and medium-sized businesses opportunities for development, this was emphasized by the head of the OTP Bank factoring financing department Lina Zaika during the business conference organized by the European Business Association and the Independent Association of Ukraine’s Banks.
"Most often, factoring services are in demand among companies engaged in production and wholesale sales. Such enterprises constantly need replenishment of working capital and do not have enough collateral. Therefore, this type of bank financing will be interesting for such companies. Factoring is often used by importers, thereby reducing currency risks for themselves," said L. Zaika.
Factoring financing for SMEs is a simple and affordable product that allows to receive working capital for the business immediately after the delivery of the goods, without waiting for the end of the deferred payment under the contract with the buyer.
OTP Bank and the USAID Project "Financial Sector Reform" implement a joint program to support small and medium-sized enterprises through targeted financing at an interest rate of 7% per annum.
In addition, the Bank was one of the first to join the "Affordable Factoring" program implemented by the Entrepreneurship Development Fund through partner banks. Financial support for Ukrainian manufacturers and sellers of Ukrainian-made goods under factoring contracts provides for interest rate compensation up to the level of 13% per annum.
"The rates, reduced with the help of projects from USAID and the Entrepreneurship Development Fund, increase the demand for factoring. I hope that in Ukraine it will be possible to develop this product to the same level as in European countries," added L. Zaika.
In the EU, factoring is a popular financial instrument. For example, the volume of the factoring financing market in Poland is 15% of GDP, in Hungary - 7%, in Slovakia and Romania - 3%, while in Ukraine - 0.1% of GDP (about EUR 100 million).
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Public Joint Stock Company OTP Bank is a subsidiary of OTP Bank, which is the largest independent Central-Eastern-European banking group. JSC OTP Bank is one of the largest domestic banks, a recognized leader in the financial sector of Ukraine. The Bank provides a full range of financial services to corporate and private customers, as well as to small and medium enterprises. The bank entered the Ukrainian market in 1998, and since then it enjoys a staunch reputation of socially responsible, reliable and stable institution providing its consumers with services of European quality standard.
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