Zvilo, the digital platform unlocking working capital in the Balkans, has signed a Memorandum of Understanding (MoU) with Mastercard, signifying a strong collaboration and ongoing partnership.

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

Admir Imani, Chairman of Zvilo, stated: “We are excited to have partnered with Mastercard in the Balkans, an often-overlooked market. We will be working 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 generating digital financial products within the trade sector, reducing barriers for SMEs wanting to access working capital. According to the OECD et al., SMEs comprise over 99% of total enterprises in the Balkans and are the backbone of local Balkan economies. Of this, between 30–50% of SMEs operate within the trade sector, a sector that is susceptible to having significant amounts of cash locked up in working capital.

Furthermore, according to The World Bank Enterprise Surveys, 39% of Balkan companies, on average, are currently using term loan financing for working capital. However, due to difficulty obtaining debt, this only covers around 13% of working capital finance needs. There remains significant demand for finance, with an average of 41% of businesses needing loans; however, with roughly 75% of loans requiring considerable collateral, access to finance is limited in the region. Finance is particularly inaccessible to SMEs with collateral requirements at almost 200% (on average) of the loan value.

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

Zvilo has launched its Supply Chain Finance program in Kosovo, allowing SMEs to access funding without the need for any collateral. With the program well underway, Zvilo is also in the final stages of optimising its innovative Supply Chain Finance platform with an artificial intelligence engine. At a future date, the collaboration also promises a best-in-class digital wallet for SMEs, equipped with savings, payments, and other functionalities.

Under the broad objectives of the partnership, Zvilo and Mastercard aim to also create products for the consumer base. One key metric is to reduce the number of unbanked people in the Balkans, almost 40%, by providing the necessary digital financial tools for the market and savings of up to 85%.

This announcement follows the recent news of Zvilo signing the terms for a debt facility of up to €50m with a London-based fintech fund, enabling Zvilo to scale its SME lending program in the Balkans. Read more on Zvilo’s website at: bit.ly/3uN4O03.