Business loan

A business can get a loan in Ukraine to cover operational needs or implement business projects.  

Depending on the goals and criteria that the business meets, it is possible to obtain either a regular loan or a preferential one (within the framework of the small business assistance program introduced by the Government of Ukraine).  

A business loan plays an important role not only for entrepreneurs, but also for the economy as a whole, as it provides an opportunity to purchase fixed assets, replenish working capital, etc., within the planned timeframe.  

We will talk about what loan programs are available for business today in this article.    

What are the types of business loans today?   

Loan 5-7-9 (for small businesses)   

The most popular lending program today is “Affordable Loans 5-7-9”. It was developed by the government to support and stimulate business development in a difficult period (in particular, under martial law).  

Such financial support is currently provided by 46 banks, including the most popular PrivatBank, Sberbank, Raiffeisen, etc. 

Below are the main conditions of this program:  

• firstly, the loan is provided for specific needs (purchase of fixed assets, non-residential real estate and land plots, construction, repair, replenishment of working capital);  
• secondly, the interest rate per annum depends on the level of annual income of the enterprise and the number of jobs (5-7% – revenue up to UAH 25 million, 2 jobs; 9% – revenue up to UAH 50 million, 3 or more jobs);  
• thirdly, the maximum loan amount is UAH 5 million, but for such industries as the processing industry, animal husbandry, energy – UAH 150 million;  
• Finally, the maximum loan amount varies depending on the use and is 2-7 years.     

Energy Efficiency Loan (for medium and large businesses)   

In Ukraine, in addition to “5-6-9”, other loans are available for most medium and large businesses, which provide for obtaining a larger amount.  

In particular, JSC “Decarbonization Fund of Ukraine” provides loans of up to UAH 90,000,000 on the basis  of the Resolution of the Cabinet of Ministers of Ukraine No. 761 and for the purpose of implementing energy efficiency projects (installation of solar panels, wind generators, etc.).  

Options for receiving assistance can be the signing of a lending, leasing, factoring agreement, respectively.   

Among the main features of this loan are the following:   

• the loan term is 10 years maximum;  
• The interest rate is 9% per annum, but can be reduced by 2% if the business uses nationally produced equipment.  

It is worth emphasizing that this loan can be obtained by both businesses and other legal entities (condominiums, local councils, cooperatives, etc.).  

Among the main requirements for applicants are the official state of registration within the last year and the absence of any ties with the aggressor state.   

Other lending programs   

In addition to the support programs mentioned above, banking institutions provide a loan for business in Ukraine on other terms, in particular:  

• a credit line (a revolving loan that allows you to use funds within the limit);  
• overdraft (provided automatically when the account balance becomes zero);  
• leasing (long-term lease of equipment, vehicle with the right of redemption).  

Which is better: get a loan or grant support for your business?   

Since 2022 and the full-scale invasion of the Russian Federation into the territory of Ukraine, both grant and loan programs have gained significant popularity.  

Each of them has its own advantages, and the corresponding financial assistance can be received from these two sources at the same time.  

Let’s explore the main features of each of these types of support:   

• loan — the money is returned with interest; the bank may require collateral, surety; funds can be used for almost any needs;  
• grant — the money does not need to be returned; it is issued on a competitive basis, which requires careful preparation; funds can be spent only for specific purposes provided for by the relevant grant program.  

From the above, it is worth pointing out that the choice between a loan and a grant depends on your situation. The loan should be chosen by the business that needs flexibility and speed, and the grant should be chosen for the implementation of individual projects that meet social and innovative criteria.  

For more detailed information, we also advise you to seek advice from our lawyer.   

What are the basic requirements a business must meet to get a loan?   

To get a loan, a business must first of all prove to the bank its legality, financial stability, as well as creditworthiness.  

The basic requirements can be described as follows;  

• firstly, the company can repay the debt on time (has a stable income that does not exceed annual expenses);  
• secondly, the business is legally clean (registered as a legal entity, sole proprietorship in accordance with the current national legislation, has been operating on the market for at least one year);  
• thirdly, the company has a proper business reputation (it has not been involved in problematic situations with the tax authorities, its counterparties or criminal cases);  
• fourthly, the business is ready to provide the collateral object (an additional guarantee to ensure that the bank’s funds will be returned).  

What documents may be required to confirm the compliance of a business with the requirements for granting a loan?   

To obtain a loan for the implementation of the relevant project, a business needs to prepare a whole package of documents, in particular, to confirm its proper financial condition.  

First of all, the bank will require an application for a loan of the established form, financial statements for the last year or more, a certificate from the tax office on the absence of debt, charter, etc. 

Depending on which bank the entrepreneur applies to and which industry the business itself belongs to, the documentation will be different.   

Seeking professional help in obtaining a loan for your business can greatly improve your chances and save a large amount of time. 

A specialist of Prikhodko & Partners Law Firm will advise you properly, prepare all documents for a bank or other institution and bring you to the completion of the entire process. To find out the cost of its services, fill out the form below.