Working capital platform Zvilo signs MoU with Mastercard

The partnership supports Zvilo’s plans to transform the traditional banking sector and revolutionize SME lending in the Balkans by enabling access to short-term working capital across different value chains.

Admir Imani, President of Zvilo, said, “We are delighted to have partnered with Mastercard in the Balkans, an often overlooked market. We will work with Mastercard to help transform how businesses in the region can access working capital and provide liquidity, reducing complexity and risk.

The partnership will focus on creating digital financial products in the commerce sector, reducing barriers for SMEs wishing to access working capital. According to the OECD et al., SMEs account for more than 99% of the total number of businesses in the Balkans and form the backbone of local Balkan economies. Of this number, between 30 and 50% of SMEs operate in the trade sector, a sector that is likely to have significant amounts of cash tied up in working capital.

Furthermore, according to the World Bank Enterprise Surveys, 39% of Balkan businesses, on average, currently use term loan financing for their working capital. However, due to the difficulty of obtaining debt, this only covers about 13% of working capital financing needs. The demand for financing remains strong, with an average of 41% of businesses needing loans; however, with around 75% of loans requiring substantial collateral, access to finance is limited in the region. Financing is particularly inaccessible to SMEs whose collateral requirements amount to almost 200% (on average) of the value of the loan.

Access to finance for SMEs has deteriorated during the pandemic. At the same time, the anticipation of a future recession in the global market is further hampering any possibility for lenders to finance SMEs at a pre-covid level. In partnership with Mastercard, Zvilo seeks to change that.

Zvilo launched its supply chain finance program in Kosovo, enabling SMEs to access finance without the need for collateral. With the program well underway, Zvilo is also in the final stages of optimizing its innovative Supply Chain Finance platform with an artificial intelligence engine. At a later date, the collaboration also promises a top-notch digital wallet for SMBs, equipped with savings, payments and other features.

As part of the overall goals of the partnership, Zvilo and Mastercard also aim to create products for the consumer base. A key indicator is to reduce the number of unbanked people in the Balkans, by almost 40%, by providing the digital financial tools necessary for the market and savings of up to 85%.

This announcement follows the recent announcement that Zvilo has signed the terms of a credit facility of up to €50 million with a London-based fintech fund, allowing Zvilo to expand its SME lending program in the Balkan.