How Ukraine supports businesses

Government grants and business loan programs are good options for supporting a business. Rubryka tells how it works and what Ukraine will offer in 2024.

What is the problem?

Where to get money for a business is one of the first questions that many entrepreneurs just starting in business face. Despite talent, ideas, and energy, without financial support, a startup can remain only at the concept level.

What is the solution?

Today, the state is focused on supporting small and medium-sized businesses. Since the beginning of the war, several effective programs have been introduced, thanks to which young entrepreneurs can get on their feet and professional ones can develop their businesses. First of all, this is the provision of grants and preferential lending.

How does it work?

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In July 2022, as a response to the challenges of the war in Ukraine, Ukraine's digital governance platform, Diia, created the eRobota portal. It offers various government grants for starting and developing your own business. This is financial support, a kind of stimulus the government provides entrepreneurs to help them realize their business ideas. This could be funding for a new product launch, technology development, or even support for business expansion. The best part of such assistance is that the government grants do not have to be paid back. The money is returned to the treasury during the enterprise's activity — in the form of paid taxes and fees.

Active entrepreneurs and people without business experience can receive eRobota grants. Today, the following offers are available on the portal:

For beginner-entrepreneurs

Grant for own business

For individuals, the most popular grant is Your Business. The program is designed for those who want to start or develop their existing small or micro business — to open a cafe or pastry shop, a hair salon, a grocery and household goods store, a veterinary clinic, a service station, or a repair shop.

The size of the grant can be from ₴50 to ₴250 thousand (from $1300 to $6700). Funds can be spent on equipment purchase, purchase of raw materials, rent payment (no more than 25% of the grant amount), and equipment leasing. The micro-grant funds must be used within the first six months from the moment of receipt.

Conditions for receiving funds from the state:

employ at least one employee;
be an entrepreneur for at least three years;
to pay taxes on income and wages of employees in a timely manner.

Provided these obligations are fulfilled, the grant amount is non-refundable. You must return the amount of your grant only if you do not fulfill your obligations to the state. That is, you will not create jobs according to the grant amount. If the grant amount is up to ₴150,000, you need to create one job, and if it is up to ₴250,000 — at least two new jobs).

Photo from open sources.

The grant is available both for existing individual entrepreneurs or legal entities and those just planning to start their own business. These are citizens of Ukraine aged 18 to 65:

who do not stay and do not conduct economic activity in the temporarily occupied territories of Ukraine;
who do not conduct economic activity on the territory of Russia;
who are not under sanctions;
in respect of which no bankruptcy proceedings have been initiated;
in respect of which there is no court decision on criminal liability for corruption;
which have no debt to the budget.

The application and receipt of a grant for business in Ukraine can be submitted online through the Diia portal and offline by contacting the nearest Oschadbank branch. Before sending an application, you need to draw up a business plan. Use the business plan form approved by the order of the Ministry of Economy of Ukraine. An example of a completed business plan can be viewed here.

Applying through Diia takes about 20 minutes. For this you need to:

Register or log in to the Diia portal (BankID or electronic signature will be required).
Fill out the application form.
Attach a business plan.
Sign the application with an electronic signature and send it.

The State Employment Center will consider the application within ten working days after submission. According to the procedure for providing micro-grants, the decision is made based on the bank's conclusions: assessment of the business plan, interview, and the results of the business reputation check. Video instructions on how to apply for the Own business grant can be viewed at the link.

Money for farmers and processing enterprises

In 2024, the government grant program eRobota will continue its work to develop horticulture, viticulture, berry growing, greenhouse farming, and processing.

Greenhouse grant

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According to the eRobota program, a grant for a greenhouse can be obtained by private enterprises and legal entities that own land or have the right to use it for seven years.

The sizes of grants vary according to the land sizes: for 0.4-0.6 hectares (0.1 – 1.4 acres) — ₴2 million (around $53,394); for 0.8 – 1.2 hectares (1.9 – 2.9 acres) — ₴3.5 million (around $93,439); for 1.6 – 2.4 hectares (3.9 – 5.9 acres) — ₴7 million (around $186,879).
The grant is provided for constructing a modular (from 0.4 ha to 2.4 hectares) film greenhouse and can be up to 70% of the construction cost, but no more than ₴7 million.
Non-stationary, non-glass greenhouses within a budget of up to ₴7 million per two hectares are impossible. For example, if the construction cost is ₴20 million, and the state's share cannot exceed ₴7 million, this will amount to 35% of the project cost, respectively.
There are no critical limits on the crops that can be grown. These include fruit and berry crops, vegetables, seedlings, and flowers. The main thing is that the plant seedlings grown in the greenhouse are entered into the register of plant varieties.
There are certain requirements for the foundation, area, frame, and film. A modular greenhouse must be provided with a source of water intake and irrigation.
The grant can be used to pay any bills related to modular greenhouse construction projects included in the estimate. However, you cannot buy land with grant funds.

Mandatory conditions for receiving a grant are:

Creation of jobs: at least 14 jobs per one hectare of modular greenhouses.
The construction term of a modular greenhouse should not exceed one year from receipt of funds. After 12 months, the greenhouse should become functional, and the corresponding production processes should start there.
Business activity after completion of construction should be carried out for at least three years.
Taxes and fees to the budget should be paid for at least three years.

The greenhouse grant program extends to the entire territory controlled by Ukraine, including the liberated territories. All applications are submitted online. Processing takes 15 working days.

Garden grant

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To receive a grant under the government program Your Garden, you must choose only plants on the resolutions list adopted by the Cabinet of Ministers. Grants are available for gardens ranging from 1 to 25 hectares, and the amount of funding depends on what exactly you plan to plant.

The size of the grant: the biggest grant, up to ₴400,000 per hectare, can be attracted if you grow blueberries, bilberries, pears, or apples. The smallest amount, up to ₴140,000 per hectare, can be received for planting currants, sea buckthorn, apricots, plums, and cherries.

The state co-finances the garden's establishment together with the entrepreneur: the grant is provided in the amount of 70% of the project cost, and 30% is paid out of funds of the grant recipient. The term of implementation of the planting project should not exceed 18 months from the date of receipt of budget funds. For the grant to be irreversible, paying taxes and engaging in gardening for at least five years is necessary.

To participate, a farmer or enterprise must own or use a plot of land for at least seven years. Also, the main requirement is the creation of jobs with official employment. The garden owner must have an irrigation system; otherwise, the application will be rejected. Getting a grant for a garden that has already been planted is impossible. The grant is given for planting a new garden: whether it is a new business or whether you are expanding the area of plantations — it does not matter.

An application for a grant to create gardens can be submitted online through the Diia portal. The conditions for the preparation of documents can be viewed at the link. It will be useful to familiarize yourself with the explanations prepared by the Ministry of Agrarian Policy and Food, analyzing the most frequent mistakes and questions of applicants for grants for the development of horticulture, berry growing, and viticulture.

Important: From January 2024, conditions for providing government grants under the eRobota program for developing horticulture, berry growing, and viticulture are planned to expand. The Ministry of Agrarian Policy prepared the relevant changes. In particular, it is proposed to change the conditions for planting and arrangement of plantations on the land plot or adjacent plots. According to the new regulations, clause 4 of the Procedure for granting will be supplemented with the following content.

Grant for a processing enterprise

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This type of aid from the state aims to create new production facilities for processing enterprises or increasing the capacities of existing ones. Companies specializing in producing furniture, metal products, textile and chemical products, wood products, and food products can become recipients of grants. There is a nuance here — the product must be changed so that it cannot return to its original form. For example, frozen berries and fruits do not belong to the processing industry. The berries must be cut, frozen, dried, or processed into jam or fruit roll-ups.

The size of the grant can be up to ₴8 million. It can be spent on purchasing and delivering the main means of production (machines, technological equipment) and their commissioning.

The state transfers 50% of the amount of the grant. The requirement is the creation of five to 25 jobs. The number of employees depends on the amount of the grant. For enterprises operating in the liberated territories, co-financing entails the entrepreneur funds 20% and the state — 80%. You can apply for assistance and familiarize yourself with the conditions and rules for its submission on the Diia portal.

In 2024, the government increased funding and improved the process of providing grants to create or develop processing enterprises as part of the eRobota program. From now on, it will be possible to use the funds of the General Mandatory State Social Insurance Fund as a source of funding for the program in case of unemployment. The main manager of these funds is the State Employment Service. As Nadiya Bihun, the Deputy Minister of Economy, noted, thanks to this decision, by the end of this year, entrepreneurs will be able to receive additional grants for processing up to ₴1 billion.

Veteran support

Grants for veterans and their family members

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In April 2023, the government expanded the eRobota program and launched three new veteran grant programs. Thanks to this, veterans, as well as their wives or husbands, can apply for and receive funding from the state to implement their own ideas or scale up an existing business.

Amount of the grant:

₴250,000 (around $6674) — only veterans can apply;
₴500,000 (around $13348) — the husband or wife of a veteran can apply;
₴1 million (around $26697) — a veteran who has been an individual entrepreneur for at least three years can apply.

The last two grants are provided under the condition of co-financing with the recipient in the ratio of 70/30. That is, the grant recipient must invest 30% of their own funds in their business, and the state will provide 70% of the funds in the form of a grant. Creating one to four jobs, depending on the grant type, is also a mandatory condition.

A veteran entrepreneur can use the grant funds:

for the purchase of furniture, equipment, and vehicles that will be used for commercial and industrial purposes;
for the purchase of licensed software;
for the purchase of raw materials, goods, and services related to the implementation of the business plan;
for marketing and advertising services;
for rent for the use of non-residential premises and land;
for paying equipment rental fees;
for the purchase of equipment under leasing conditions and commercial concession.

Grant applications must be submitted through the Diia portal. The decision to provide a grant is made by the State Employment Center after receiving information from the bank, checking the reputation and information in the application, and determining the results of the interview with the recipient conducted by the regional employment center. Grant recipients can also undergo free training for entrepreneurs and receive consultations at regional employment centers.

Affordable loans

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In addition to grant programs, the state offers businesses an Affordable Loans 5-7-9 lending program. It was created at the initiative of the president and the Cabinet of Ministers to support the development of small businesses.

An individual entrepreneur or a legal entity that participates in the program can receive a loan of up to ₴50 million (around $1,334,855) for up to three or five years, depending on the financing goals. In addition, the 7% and 9% rates can be reduced by creating new jobs. For each hired employee, the business receives a discount of 0.5% per annum. However, the rate cannot be lower than 5% per annum.

Preferential state credit 5-7-9 for business is given for a specific purpose. It may be:

purchase and repair of premises;
acquisition or modernization of fixed assets;
acquisition of intellectual property rights;
increase in working capital up to 25% of the cost of the investment project;
refinancing of existing debt.

Advantages:

Reduced % rate.
Decreasing the cost of credit for business entities due to the provision of state financial support with the possibility of a % rate reduction provided that new jobs are created.
Working capital financing.
Replenishment of working capital for the purchase of raw materials, materials, and other expenses related to the enterprise's economic activity.
Investing in the development of the enterprise.
The enterprise's high economic development rate is due to long-term financing of business investment needs.
Convenient loan repayment schedule.
Repayment of the loan in equal parts or an adapted schedule. Special schedule for agribusiness.

During martial law, over 40,800 soft loans worth ₴160 billion were issued within the Affordable Loans 5-7-9% program. The affordable lending program for entrepreneurs will also be extended in 2024. According to Yuliia Svyrydenko, First Deputy Prime Minister of Ukraine and Minister of Economy, ₴18 billion have been budgeted for this purpose. A program of partial compensation for the production of agricultural machinery will also be in effect this year, which will support domestic machine builders and stimulate their development. In addition, for the first time, ₴1 billion has been laid down in the budget for expanding the network of industrial parks, on the territory of which entrepreneurs can enjoy some benefits.

Does it really work?

Nataliia Lipinska, a seamstress from the Rivne region, independently wrote a business plan for participation in the Own Business program, successfully defended it, and is now developing a sewing business. Photo: business.rayon.in.ua

The Government Portal reports that, in total, 10,400 Ukrainians have received grant funds for starting or expanding their business since the government project eRobota launched in July 2022.

The government issued:

9,634 micro-grants for ₴2.3 billion (around $61,678,640) under the Own Business program;
482 grants for ₴2.5 billion (around $67,042,000) — for the development of processing enterprises;
144 grants for ₴631 million (around $16,921,400) — for horticulture and greenhouse development;
132 grants for ₴50 million (around $1,340,840)— for veterans and members of their families.

According to the program Own Business, in 2023, 9.6 thousand Ukrainians became winners of the program. Every business has a unique story and product or service. Among them are the production of natural cosmetics and wooden toys, bags, backpacks, and accessories made of leather, women's underwear made of natural fabric of vegetable origin, health boxes of sweets and goodies for pets, production of concrete blocks, printing centers, and much more. Thanks to all these business ideas, 20.8 thousand jobs will be created.

The grant program for veterans and their spouses, which started less than a year ago, also showed excellent results: 241 program winners received ₴99.5 million in grant funds. Soldiers and their families will not only be able to provide for their families and become independent but also provide work for more than 500 Ukrainians.

So far, entrepreneurs from Lviv, Rivne, Kyiv, Ivano-Frankivsk regions, and the city of Kyiv have received the most grants. Anyone who wants to work and support the economy in such a difficult time for Ukraine can get a grant both in the city and the village of any region. In 2024, the government will double the funding of the micro-grant program for business development — it is planned to issue grants worth ₴3.5 billion (around $93,858,800).

Even more useful solutions!

In addition to state-wide support programs for new and established entrepreneurs, including veterans and their families, there are also regional initiatives.

In the Lviv region, ₴12,000,000 (around $321,801) have been earmarked for 2024 to support the entrepreneurial activities of the war veterans and their families. Stepan Kuybida, director of the Department of Economic Policy of the Lviv Regional State Administration, announced this on his Facebook page. Funds will be provided in two directions.

₴2,000,000 for voucher business support of veterans and their family members (vouchers for consulting services, marketing vouchers and vouchers for product certification, and participation in foreign exhibitions and fair events). Each business entity can receive one voucher during the period of martial law.
₴10,000,000 — additional grant support — financial assistance for war veterans and their families under the state eRobota government grants program in the "Grant for veterans and their family members" component.

The main conditions for providing such support are the actual registration of a natural/legal entity of an entrepreneur in the territory of the Lviv region and compliance with all norms of the current legislation.

The Kyiv City Council also approved a targeted program to support defenders of Kyiv, their families, and the victims' families. Its budget for 2023-2025 is more than ₴2.3 billion.

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