Today, the Deputy Governor of the National Bank of Ukraine Arseniy Yatsenuk, launched the second phase of the EBRD Line of Credit for Small and Medium Business (SME-2) worth $33 million. The corresponding loan agreements were signed between the NBU and the Ukrainian partner-banks (Bank Nadra, Bank Forum, VaBank, Bank Aggio, Ukrsotsbank and Bank Aval). This new phase will be used to finance projects of the EBRD’s Third Best Business Project Competition, the start of which is to be announced shortly.
The SME-2 Line of Credit is a reliable source of long term funding for Ukrainian small and medium companies. It currently offers loans of up to $2.5 million for the term of up to 5 years at very attractive interest rate of LIBOR + 8%. The SME-2 foresees granting of loans via the partner-banks to those local businesses, which meet the Line criteria for project finance. EBRD credit advisors anticipate, that depending upon an average loan size, about 45 loans may be granted to Ukrainian companies by the end of 2004.
The first SME-2 phase (also $ 33 million) was drawn down in 2001 and was used up by the end of June 2003. Under the first phase, an average loan size was $780 thousand with a tenor of just under 5 years. Loans were granted in all areas of production and in all regions of the Ukraine.
There are around 250.000 small and medium companies in Ukraine at the moment. One of the NBU’s and the EBRD’s key objectives is to promote their development through long term funding. The growing professionalism of Ukrainian SMEs, the experience the partner-banks, gained by working with EBRD, and present macroeconomic stability in the country have significantly reduced the business risk of long term lending, thus making this objective more achievable.
The First EBRD Line of Credit in Ukraine for SMEs was opened in 1995. As of today, 188 SME companies received loans worth $ 157 million within frameworks of SME I and SME II Lines of Credit. Over eight years, EBRD Credit Lines for Ukrainian SME’s have helped to create more than 5,000 jobs.
Successful EBRD experience of promoting SME lending programmes in Ukraine has been picked up by the Bank in other countries of operation. The First Uzbek SME Competition based on the Ukrainian model was completed in Tashkent in May 2003.