Not by "5-7-9" alone. What's happening in the affordable lending market for businesses

Lending for businesses is not only the government program "Affordable Loans 5-7-9". Although it is significant in terms of volume. Since February 2020, within its framework, entrepreneurs received 129,400 loans for UAH 440.1 billion. This is 48% of the total lending to entrepreneurs in Ukraine. In total, the loan portfolio of banks for businesses in Ukraine reached UAH 905.2 billion in October, according to the data NBU.LIGA.net analyzed the loan offers of the top 7 most profitable banks and found out what alternative products banks offer to entrepreneurs. We researched PrivatBank, Oschadbank, Raiffeisen, Ukrexim, PUMB, Ukrsib and OTP.What types of loans do businesses take outOne of the lending options for entrepreneurs is for replenishing working capital, through credit lines, factoring, and overdrafts. Businesses also need investment loans for modernization and to increase energy independence.In particular, PrivatBank offers a credit line for microbusinesses at UIIRD 3m, which is an interest rate tied to the market rate and changes every three months, plus 3.5%. Raiffeisen Bank offers investment loans for the purchase of cars, equipment, or real estate at 16.7–17.2% per annum.Loans with a compensating component, where part of the interest is covered by the state or the bank's partners, are also in demand. Thus, the actual cost of financing is lower. Such loans allow you to reduce the effective rate or get cashback."These are products that allow clients to pay minimum rates or receive compensation – in particular, from international financial organizations or within the bank's partnership programs," says Olga Volkova, Director of the Sales Department for Medium and Small Corporate Clients at OTP Bank.Energy loans for solar panels, storage systems, and generators are in high demand. Oschadbank reports that it has already financed such projects for over UAH 2 billion, with another UAH 3.3 billion under consideration.Banks offer a wide range of programs for farmers, including partnership loans for machinery, seeds, plant protection products, and fertilizers. Farmers can also obtain loans for the purchase of agricultural land under the "Affordable Loans 5-7-9" program and use agricultural notes."This is a financing tool for the future harvest – up to UAH 20 million, and from 2026 – up to UAH 40 million," explains Olga Volkova from OTP.Representatives of various sectors of the economy are actively taking out loans. "The largest share of loans is concentrated in trade and vehicle repair – UAH 354.1 billion, manufacturing – UAH 181.9 billion, and the agricultural sector – UAH 139.3 billion," – wrote Danylo Hetmantsev, head of the Verkhovna Rada's finance committee.Read alsoSurviving the blackout. How much Kyivstar, Vodafone, and lifecell are investing in energy independenceWhen can a bank refuse a loanBanks most often deny loans to businesses due to war risks and the company's location, financial institutions surveyed by Liga.net note. They almost never lend to businesses in frontline areas.Oschadbank explains that it operates using a risk-zoning model. "We do not provide new loans in the 'red' zone, and in the 'orange' zone, we make decisions on a case-by-case basis," says Natalia Butkova-Vitvitska, a member of the bank's board responsible for the SME sector.PrivatBank also takes an individual approach to businesses from frontline regions. "Where possible, we continue lending and assume war risks," says Yevhen Zaigraiev, a member of the bank's board.Other reasons for refusal include a poor credit history, problems with existing loans, lawsuits or criminal cases, and account freezes. Raiffeisen Bank emphasizes: "The more transparent the sole proprietor's financial statements, the higher the chances of getting a loan." The share of non-performing loans among sole proprietors is only 2%.If a business cannot service its loans, banks offer restructuring.Read alsoBusiness "catalysts": what an entrepreneur should consider to get a loanLoans from international partnersGovernment programs, particularly the "Affordable Loans 5-7-9%" program, remain a key driver of lending to small and medium-sized businesses, according to bankers surveyed. At PrivatBank, almost 70% of the business loan portfolio is formed under this program.In parallel, banks are expanding preferential lending through cooperation with international financial organizations, including the European Bank for Reconstruction and Development, the European Investment Bank, and the German development bank KfW. Oschadbank reports that almost 60% of the growth in its small and medium-sized business loan portfolio is due to agreements with the EBRD.International programs make it possible to lend to businesses that previously could not obtain loans. "The Risk Sharing Facility with IFC and EBRD guarantees make it possible to finance companies without a large collateral," explains Yevhen Zaigraiev, a member of the board of PrivatBank.Thanks to such programs, entrepreneurs can obtain loans on preferential terms – with rates starting from 0.01%, without hard collateral, for several million hryvnias, and with quick decision-making. There are also cashback programs that provide compensation for part of the loan or investment costs.Entrepreneurs are offered the opportunity to combine several credit programs. For example, Oschadbank has a "financial constructor" where one can use the bank's funds plus a risk-sharing instrument from the EBRD or a state guarantee.What will happen to affordable business loans in 2026The ongoing war in Ukraine will remain the main problem for the development of lending. The state program "5-7-9" will be the main lending program for businesses, according to Raiffeisen Bank."Leasing is becoming increasingly popular. But overall, the decline in the number of businesses will be the main challenge in the coming years," the bank notes.Will there be enough government money for affordable business loans? Bankers say that the state funding is insufficient. This refers to the "Affordable Loans 5-7-9" program.Therefore, financial institutions are focusing on deepening cooperation with international partners.

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