In 2018, the World Trade Organization (WTO) reported that over 60% of trade finance requests by small and medium-sized enterprises (SMEs) are rejected globally. As a result, trade finance is regularly listed as one of the top three obstacles to exporters. Indeed, in many cases, if the request is not accepted by the financial institutions, the transaction does not take place.
A further issue that besets SMEs which are exporting their goods and services is that of late payments. In times of distress, payment terms of 60, 90 or even 120 days are demanded by buyers, and suppliers have little option but to agree. And it is getting worse. A recent survey of SMEs in North America, Europe and Asia found that 37% of survey respondents said the number of customers who “often” paid invoices late increased during 2020.
A solution to these dual problems of late payment and lack of trade finance can now be found in the crypto market. Polytrade is a trade finance platform built on Polygon chain that aims to harness the massive liquidity of the crypto world to finance working capital for SMEs which may not be able to tap into the conventional sources of finance for a variety of reasons, ranging from a lack of understanding around some trade finance instruments to lack of collateral, high cost of borrowing or exhaustion of credit limits.
Polytrade launched its much-anticipated mainnet on Jan. 31, 2022. The launch could not have come at a better time for SMEs around the world, as the COVID-19 pandemic has made late payments by global buyers as endemic as the virus itself. The mainnet launch is a watershed moment in the crypto world as crypto liquidity can now be harnessed to bridge the $1.6 trillion global trade finance gap.
Polytrade has collaborated with Volofin, a Singapore-based fintech company, to carry out the first ever real-world invoice financing using crypto funds. The partnership was kickstarted with the funding of Volofin’s invoices to three global buyers based in the U.S., U.K. and New Zealand. The lending pool for financing Volofin’s invoices is backed by Lio Factory, an alternative investments platform building disruptive ventures in fintech and deep tech with offices in Milan, Luxembourg, London and Boston.
Low risk, high return
Polytrade has launched its inaugural stable lending pool, which has received overwhelming support from the industry. Within the first five days of the launch, the lending pool was filled by both retail investors and investment funds that were attracted to the high annual percentage rates (APRs) of up to 56% that the lenders could receive. And this is essentially for taking the credit risk of some of the biggest companies in the world.
Polytrade’s native token - TRADE - is now available on multiple exchanges, including Kucoin, Bitfinex, Uniswap, Quickswap, MEXC, Bitmart, PancakeSwap, CoinDCX and Koinbazar. Polytrade’s partnerships with the SME Chamber of India and Global Trade Review (GTR) allow Polytrade to introduce the platform to all the member SMEs and financial institutions that are associated with these partners.
Simultaneously, Polytrade is building a 100% on-chain trade financing and business finance solution specifically focused on the metaverse. Polygon (MATIC) will be the first customer on this metaverse platform, which means every invoice that Polygon is going to pay in future will go through Polytrade’s platform.
Polytrade has recently been recognized with the “Best Financial Institution of the Year” award by the governor of Maharashtra in India for its contribution towards supporting and empowering SMEs.
Using blockchain technology, Polytrade will make finance accessible to SMEs at an affordable cost by removing intermediaries from the equation and directly offering finance to them based on their invoices. The unmet demand of $1.6 trillion in trade finance closely mirrors the total liquidity of cryptocurrencies, which can now both be brought together on Polytrade’s decentralized platform. This will help to bridge the trade finance gap and amel
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