Interest-free loans for business
14.09.2022
During wartime, running the business is difficult, but extremely important. Now that the planting season must be underway, as Ukrainian agriculture provides for hundreds of millions of people throughout the Eastern Hemisphere with wheat, corn, barley, sunflower oil, poultry, eggs and egg products. Currently, many agrarians are in dare financial condition and, therefore, the government has introduced financial support: interest-free loans for businesses.
Resolution of the Cabinet of Ministers of Ukraine No 28 dated January 24, 2020 (as amended during the martial law) provide for the preferential terms of the loans to the eligible applicants. The crop sowing season is a top priority: the program enables a purchase of agricultural machinery, working capital for seeds, fertilizers, fuels etc. The state supports financially the business development in general: increase of the output, innovations, countering negative effects of aggression by Russia and Belarus (except weapons manufacturing), refinancing corporate debt owed to the Ukrainian banks.
Who can get a loan?
A commercial entity, regardless of the annual income and number of employees but subject to the following criteria:
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the applicant is registered in Ukraine as a business entity; and
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the shareholders and ultimate beneficial owners of the applicant are resident in Ukraine and are not/were not members of terrorist organizations; and
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the applicant fulfills at least one of the additional criteria:
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if an applicant is an agriculture producer, it must confirm compliance with Law "On State Support of Agriculture of Ukraine": agricultural products comprise at least 75 percent in total output value (company, private entrepreneur) or registered as a family farm and payer of IV group single tax (small farm); or
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received obtained a micro-grant for the creation and development of its business in accordance with the Procedure under Regulation No. 738;
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an applicant is a processing enterprise that received obtained non-repayable state subsidyaid for creation or development, in accordanceunder with the ProcRegulationdure No. 739;
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an applicant is an entrepreneur with an annual income of up to 50 million hryvnias, and in case itf he is part of a business group, then such group should consist of up to 5 entrepreneurs; or
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if an applicant is the retail grocery a retailer of food products, independently or in a group, (groups of business entities), provided while - at least 60 percent of their retail space mustis be designated for food (including liquor alcoholic beverages and tobacco) sales (hereinafter - – food rRetailer trade companies).
Borrowing terms
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Ceiling for principal varies - UAH 2.5 m for recipients of micro-grants, UAH 90 m for farmers and UAH 1 bn for those who prevent russian aggression and overcome its consequences;
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maturity depends on the loan purpose: investments up to 5 years, working capital up to 3 years, agriculture - up to 12 months.
Special terms for agrarians:
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loan applications deadline is October 31, 2022 (we expect the extensions). As indicated above, the maximum amount is UAH 90 m;
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compensation of the interest rate by the state treasury (taxpayers). The loan have interest of 0% within six months and during following months (up to 12 in total) - up to 5% p.a.
Special terms for entrepreneurs and enterprises that obtained state subsidies:
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Entrepreneurs can get a loan of up to UAH 1 m with the rate of 12%;
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for enterprises that obtained state subsidy under Regulation No. 738 – the maximum loan amount is UAH 2.5 million, the rate is 0% per annum for 5 years;
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for enterprises that obtained state subsidy in accordance with Order No. 739 – the maximum loan amount is UAH 16 million.
Special terms for other enterprises:
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applications can be submitted during the martial law period only;
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compensation of interest is at the expense of taxpayers. The loan will be provided at 0% interest rate for the period of martial law and within one month after its expiration or cancelation, then the rate will be 5%;
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the amount of the state guarantee is up to 50%.
Special terms for Food Retailer
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As is the case for every borrower, except farmersor agrarians, the interest on the loan is 0% p.a. during the martial law period plus 1 month after its termination or cancellation – where the the loan principal is less than UAH 60 m;
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the interest on the loan is 5% p.a. with compensation of the rest to the financial institution through the state budget disbursements in cases for the amount exceeding UAH 60 m (and up to UAH 1 billion in total);
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such borrowers are eligible regardless of their engagement with manufacturing or trade in weapons.
Privatbank, Oschadbank, Raiffeisen Bank, Ukreximbank, Ukrgasbank and a few other banks participate in the lending program. Additional terms and conditions may apply – for those, we recommend contacting directly the lending departments of banks: they can set own thresholds for collateral, financial ratios, contract documentation, insurance etc., in particular, for loans above a certain threshold.
State Bank lending programs (as of September 14, 2022):
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Privatbank:
Under the Agroseason program, two types of loans are provided:
UAH 2 million to 50 million with the following security: 50% is covered by state guarantee, and 50% is a pledge of agricultural machinery, 80% of the amount does not require additional collateral; and
"Cube" program provides for loans from UAH 0.5 million to 5 million for legal entities and up to UAH 2 million for individuals.
More details are available at the website
