Entrepreneurs of Donbass will be financed by the European Union

The new program FinancEast will allow representatives of small and medium enterprises (SMEs) in the East of Ukraine from December 20 to receive in lease or loan in the regional offices of Oschadbank, Ukrgasbank and OTP Leasing

Предпринимателей Донбасса профинансирует Евросоюз

The European Union has allocated 9.5 million euros to support small and medium enterprises in government-controlled areas of Donbass. The corresponding financing agreement, the programme FinancEast signed on Thursday 19 December. The parties to the agreement — the German-Ukrainian Fund, OTP Leasing, Oschadbank and Ukrgasbank.

According to the program of the grant resources will be provided to entrepreneurs in the form of compensation to 50% of the cost of investment projects financed by OTP Leasing, Oschadbank and Ukrgasbank. The projects include the acquisition, lease or loan of agricultural machinery, equipment and vehicles, installation, construction or reconstruction of facilities, commissioning, etc.

“Thanks to this grant, the EU hopes to restore sustainable lending and leasing operations in the region, where banks almost did not work in 2014, supporting sustainable economic and social recovery, and thereby contributing to peace and reconciliation in the East of Ukraine”, — said during the signing of the agreement, the head of “Local and human development” of the EU delegation in Ukraine Frederick coons.

A plus of the program General Director of OTP Leasing Andrew Pavlushin said, is that it provides funding for “many hands.”

Also Andrew Pavlushin recognized that the time for receiving the funds via OTP Leasing, as well as through many other banks, on the frontline areas there are restrictions. With the launch of the funding programme of the EU, such restrictions will gradually be eliminated.

However, bankers believe that the 9.5 million Euro will not last long. For example, according to the calculations of Andrew Pavlushina, OTP Leasing their program will close in late January 2020. So they hope for a new funding program.

Program funding in the government-controlled Donetsk and Luhansk regions welcome the NBU. “We support programmes that can help to revive lending to the Ukrainian economy and business in Eastern regions”, — said the first Deputy Chairman of Bank Ekaterina Rozhkova.

Overall, in the segment of small and medium business Ekaterina Rozhkova noted the revival of lending. “The demand for loans in the SME segment increases annually, while the quality of service is significantly higher in comparison with loans to other business segments,” she said.