Small and medium-sized enterprises (SMEs) in the Ukrainian capital Kyiv now have the opportunity to access investment loans at just 7.5% – half of the nominal rate of 15% – thanks to the Interest Rate Compensation Programme for SMEs, an EU4Business initiative implemented by the German-Ukrainian Fund (GUF), with funding from the EU and Germany through the German Development Bank KfW. In the nearest future, the same opportunity will also apply to the regions of Kharkiv and Ternopil, which have signed Cooperation Memorandums with the GUF.
Under the programme, 50% of the nominal interest rate set by the loan agreement is compensated for SMEs in Kyiv city, providing for the lowest interest rate available anywhere in Ukraine. Similar agreements in other regions are expected to follow, with the regions of Kharkiv, Ternopil, Mykolaiv, Dnipropetrovsk, and Kirovgrad having expressed interest in taking up the scheme.
The initiative is part of the second phase of the EU4Business SME Finance Facility in Ukraine. It is implemented thanks to the joint efforts of the German government, which has provided the GUF with a loan of €10 million through the German KfW Development Bank, and the European Union, which is providing €5 million in financial assistance to compensate for currency losses under the loan. The funds for the subsidy of interest rates for SME loans are being provided from local authority budgets.
The initiative is open to small enterprises (fewer than 50 employees and annual income below €10 million), and medium enterprises (50-250 employees, annual income €10-50 million), for local currency loans of up to the equivalent of €250,000. The term of interest rate compensation is two 2 years.
