The Cabinet of Ministers provided banks with UAH 20.8 billion in portfolio-based guarantees to support business

The government allocated UAH 20.8 billion in state guarantees for 19 banks / Shutterstock

The government provided State guarantees to 19 banks on a portfolio basis for a total amount of up to UAH 20.8 billion. The mechanism should simplify access to credit for micro, small and medium-sized businesses, in particular enterprises in the agrarian sector, which, due to the war and problems with logistics, need additional working capital.

Prime Minister of Ukraine Serhii Koretskyi announced this.

Why businesses need new guarantees

According to the Prime Minister, enterprises are in urgent need of financing now. Russian attacks on port infrastructure and disruptions in logistics make exports difficult, due to which companies need more funds to maintain current operations.

For business, the state guarantee is important primarily in situations where the enterprise has a promising project or stable activity, but cannot provide the bank with enough collateral to obtain a loan.

How the program will work

The mechanism assumes that the state assumes part of the banks' credit risk. Thanks to this, financial institutions can more actively lend to entrepreneurs with insufficient collateral.

State guarantee may cover up to 80% of obligations under the loan portfolio, as well as up to 80% of obligations for each individual loan.

That is, in case of problems with loan repayment, part of the risk is assumed by the state, which reduces the burden on the bank and simplifies the entrepreneur's access to financing.

How much will it cost the budget

In 2026, banks will pay to the state budget 2% of the amount of state guarantees provided to them.

If the decision is implemented in full, the budget will receive approx UAH 400 million corresponding payments.

At the same time, the guarantee itself does not mean automatic allocation of UAH 20.8 billion from the budget to entrepreneurs. It is about state provision of part of the credit risk, which should stimulate banks to issue more business loans.

The program is valid from 2020

The mechanism of portfolio state guarantees has been operating in Ukraine since the end of 2020. Its main goal is to help micro, small and medium-sized businesses obtain bank financing without having to cover the loan 100% deposit.

In fact, the state allows banks to reduce collateral requirements by remaining a partial guarantor of such loans.

The current solution is especially relevant for enterprises that work in conditions of war risks, disruptions with logistics and unstable exports. Additional lending should help the business to finance purchases, production, salaries and other current expenses without a long wait for income from the sale of products.

What it means for business

The extension of state guarantees actually creates for entrepreneurs an additional channel for attracting working capital. This can be most important for companies that have stable operations, but have lost part of their collateral due to the war or cannot meet the standard requirements of banks.

At the same time, the program is a way for the state to support economic activity without directly financing all loans from the budget.