Small business lending programs

Small business lending programs were developed by banks to support entrepreneurs under martial law and economic instability, as well as to implement their investment projects (in particular, for the transition to alternative energy sources).  

Loans under these programs are most often provided at preferential rates per annum, without significant collateral and remotely.  

Despite the fact that there are no particularly large funds for small business lending programs, their intended use is wider compared to programs to support large businesses, respectively. We will talk about this in more detail in the article below.  

The concept of small business: who can be attributed to this category?  

The first thing to understand is the difference between small and other types of domestic business. Therefore, this category of enterprises is characterized by a relatively small number of employees and the volume of annual income.  

According to the Law of Ukraine “On the Peculiarities of Regulation of the Activities of Legal Entities of Certain Organizational and Legal Forms in the Transition Period and Associations of Legal Entities”, small business includes:  

• firstly, companies with a staff of no more than 50 people;  
• secondly, enterprises whose annual income does not exceed 10 million euros.    

The main types of lending for small businesses: which banks should be contacted first?  

PrivatBank  

Since the beginning of 2022, the Affordable Loans 5-7-9% lending program has been gaining more and more popularity among small businesses. In recent years, PrivatBank has developed and implemented many different initiatives in this area, including programs called KUB (“Country of Successful Business”).  

The main terms of the loan under these programs for small businesses are as follows:  

• maximum loan amount – UAH 50 million;  
• annual rate – does not exceed 9%;  
• The purposes of lending are the acquisition of fixed assets, the purchase of commercial real estate, land plots, construction, repair of non-residential premises, and the acquisition of intellectual property.  

Reifeisen Bank  

Raiffeisen Bank, as one of the largest banks in Ukraine, provides loans for small businesses with stricter conditions compared to PrivatBank. A company can receive up to UAH 9,000,000 in loans at 23.65% per annum (the smaller the loan amount, the lower the interest).  

At the same time, Raiffeisen Bank often offers unsecured loans unlike PrivatBank, which is an advantage, since it takes much less time and carries fewer legal risks.  

FUIB  

Within the framework of the “VseBUSINESS” program, this bank offers entrepreneurs a quick way to get financing for their own development in the amount of up to UAH 3 million.  

Moreover, if the business has not yet opened an account with FUIB, then it will have a benefit in the form of paying 0% commission for providing lending in the first year of using the funds. For more detailed information, we advise you to additionally order a consultation with our lawyer.  

What does the procedure for obtaining a small business loan consist of?  

Obtaining a loan by a small business is a rather complicated process. It is important to remember that about 75% of success in obtaining funding is taken by proper preparation of documents. 

As a general rule, entrepreneurs receive a loan as follows:  

• First, the choice of a bank and a suitable program. For convenience, most banking institutions offer the ability to use a “loan calculator” and detailed information information for each of the presented lending programs;  
• secondly, obtaining advice from a bank employee (if necessary) and starting to prepare the necessary documentation. As a rule, the full package includes constituent documents, financial statements, certificates of the absence of debts (it is advisable to receive no more than a month before applying for loan funds), documentation for property secured by collateral, etc.;  
• thirdly, submission of applications and documents for obtaining a loan through the application system at the relevant banking institution (or by mail);  
• Fourthly, passing a preliminary analysis and participating in an interview with a bank representative.  As a general rule, the manager analyzes the business, its financial condition and credit history and forms a preliminary decision;  
• Finally, making a formal decision on the application.  

How can a lawyer at Prikhodko & Partners help to obtain a loan?  

The lawyer of our company will provide comprehensive support to small businesses in the process of obtaining a loan, which will include an analysis of the bank’s requirements, an assessment of any legal risks (in particular in the case of secured loans), an analysis of the loan agreement, the preparation and collection of documents for the bank, negotiations with representatives of the institution, and more.  

If necessary, the lawyer can also assist the client in appealing against the bank’s unlawful or unreasonable refusal to provide financing.  

The assistance of our lawyer will be especially relevant in case of obtaining loans for large amounts or lending for the implementation of investment projects (for example, energy efficiency).  

To order a consultation and find out the cost of supporting a lawyer of Prikhodko & Partners in obtaining loans for small businesses, fill out the form below.