New EU4Business loans for SMEs as KfW signs deal with Ukrainian bank

Ukrainian hrivna

The German-Ukrainian Fund (GUF) and KredoBank signed an agreement today, 11 October 2017, on providing UAH 100 million in loans to Ukrainian small and medium-sized enterprises (SMEs). According to the agreement, KredoBank will provide credit at the level of around 15% per annum in hryvnias. The deal is part of the SME Promotion Programme funded by the German government through the German State Development Bank KfW and is supported by the European Union’s EU4Business initiative.

The agreement follows a similar deal signed a month ago between the GUF and ProCredit Bank. "Now we are signing another loan agreement with a further partner – Kredobank. It became a good tradition to regularly meet and welcome a new partner bank into the GUF family,” said KfW director in Ukraine Lutz Horn-Haacke. “Such a demand for GUF funds is strong evidence that we all, KfW on behalf of the German Government and the European Union, are doing the right job by providing access to finance to SMEs through Ukrainian banks."

Within the framework of the agreement, KredoBank will receive UAH 100 million for loans to SMEs. "The SME Promotion Programme is expanding more and more,” said Oleg Strynzha, executive director of GUF. “Our main goal for the near future is to join forces with as many partner banks as possible. Also, in the framework of the GUF development strategy till 2020, we plan to improve the SME lending mechanism by completing it with credit guarantees within the framework of the National Bank of Ukraine's Restart lending project and interest rate compensation from local administrations."

Priority sectors

The agreement focuses on the following priority sectors:

  1. agriculture, forestry and fisheries;
  2. processing industry;
  3. temporary placement and organisation of food;
  4. electricity, gas, steam and air conditioning supply.

SMEs are one of the key groups of KredoBank clients. For Damian Ragan, First Deputy Chairman of the Management Board of KredoBank, “The agreement with the German-Ukrainian Fund provides us with new, convenient and accessible tools for expanding our cooperation with them. Support for these categories of business in the priority areas, firstly, will facilitate their activities on the market, and, secondly, will activate and strengthen the economy of Ukraine as a whole.

Funds will be provided for purchase or upgrading of main machines or equipment, purchase, construction or reconstruction of premises, and replenishment of working capital necessary for expansion of existing or creation of new production.

"Apart from practical advice on how to access the EU's Single Market and to present and market your products in the best possible manner, one of the main goals of the EU4Business initiative in Ukraine is to improve SMEs' access to affordable long-term financing in local currency. We are pleased to team up with KfW in doing this, so that the Ukrainian SMEs can benefit from such financing," said Jocelyn Guitton, Acting-Head of the Trade Section at the EU Delegation to Ukraine.

KfW’s SME lending programme in Ukraine is part of the second phase of the EU4Business SME Finance Facility, which aims to stimulate local currency lending, especially for micro, small and medium-sized enterprises (MSMEs) in Ukraine that are not earning foreign currency and cannot afford the high costs of borrowing.