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BDF and German development bank KfW sign €40.5 million grant agreement to support small and medium-sized enterprises

 

The Business Development Fund (BDF) and the German state development bank KfW have signed a EUR 40.5 million grant agreement to support small and medium-sized enterprises (SMEs). The funds will be provided by the German Government under the “SME Resilience Facility” project.

The agreement was signed on the Ukrainian side by BDF Chairman of the Management Board Andriy Gapon and First Deputy Chairman Valeriy Maiboroda.

The agreement aims to improve access to finance for Ukrainian micro, small, and medium-sized enterprises (MSMEs), with a priority on those operating in de-occupied and war-affected territories, through financial instruments implemented by BDF.

The “SME Resilience Facility” project consists of four interrelated components: investment grants, long-term liquidity loans, a BDF guarantee mechanism, and advisory and technical assistance.

Targeted grants will be provided to MSMEs as partial compensation for the principal amount of investment loans. The grant amount will be determined based on defined eligibility criteria, such as geographic location or affiliation with priority groups (e.g., women-led businesses, internally displaced persons, or veterans). The average size of such a loan is expected to be around EUR 250,000. Grants may also support war-related recovery activities.

BDF will provide banks with long-term liquidity in hryvnia to allow them to lend to MSMEs on favorable terms. These loans can also be combined with the state “5-7-9%” program.

The project also foresees the establishment and capitalization of a BDF guarantee facility to reduce the credit risks for banks and encourage lending in high-risk or underserved regions. Additionally, it includes funding for advisory and technical assistance to BDF, and if necessary, to banks and MSMEs.