EU compensates leasing loans for SME in Ukraine

OTP Leasing and the European Bank for Reconstruction and Development (EBRD) have launched the joint program “EU4Business-EBRD Line of Credit”. The grant assistance amounts to 10% of the financing amount.

Reports have appeared in September of this year that the European Bank for Reconstruction and Development (EBRD) will provide OTP Leasing a UAH 324 million (€10 million) loan to finance long-term lease operations with small and medium-sized enterprises (SMEs) in Ukraine. In addition, the lease company will participate in the disbursement of €1 million in European Union grants among its customers.

OTP Leasing First Deputy General Director Yanina Ponomariova said that financing of small and medium-sized businesses is one of the company’s priorities.

Yanina Ponomariova

‘These financing programs make the purchase of fixed assets even more affordable for SMEs. This program caused huge demand for financing. All businesses that meet requirements are eligible for a grant, which prompts our customers to buy new equipment with financing provided by OTP Leasing. The grant assistance amounts to 10% of the financing amount. The maximum reimbursable amount of funding is €300 thousand. The financing is mostly used to buy agricultural machinery, self-propelled and trailed, and also trucks, dump trucks, semitrailers and front-loaders’, she said.

According to Yanina Ponomariova, financing provided for contracts made under this program amounted to UAH 81.9 million as of the end of 2018.

‘After joining the EBRD program, OTP Leasing and its customers will be able to receive support in the form of expert consultations and training. In addition, small and medium-sized businesses that meet the applicable criteria will be eligible for a grant. It will stimulate investments and help reduce the cost of investment in modernization of technological and production processes in accordance with the EU’s norms and standards’, an EBRD representative said.

First customers have already procured financing under this line of credit program and received a reimbursement of 10% of financing amount (this program works with hryvnia-denominated financing only — editor’s note).

‘We bought a New Holland T7060 tractor. I am happy to work with them. The promised 10% were credited to my account according to the exchange rate; everything was transparent. The company’s specialists explained us everything, told us about all terms. OTP Leasing completely fulfilled their promises. I learned about the program from machinery suppliers, got interested in the terms, and decided to give it a try. We also applied to state banks at about the same time, and are still waiting for their response. There is a lot of red tape there. But with OTP Leasing, the next day after we signed the agreement we have already gotten our tractor. Everything’s clear and transparent, no gimmicks and no “fine print”’, New Corn CEO Maksym Shpakovskyi says.

EU4Business-EBRD Line of Credit supports projects that help small and medium-sized enterprises in Ukraine increase production capacity and boost their competitiveness in EU’s export markets. These projects could be implemented in agriculture, food and light industries, road construction, transportation and many other sectors of economy.

‘Our company bought three Ford dump trucks under OTP Leasing’s program. We learned about the EBRD-EU compensation program from a dealer. We were offered very nice terms, which became the key in our decision to buy the trucks. OTP Leasing offered us 10% compensation, fixing the rate in hryvnias. It’s very good. This program is just what we need. If more people knew about this program, more people would’ve taken advantage of it. I am very happy, and even when speaking at some forum, I advertised this program. Ukrainian companies really need it’, VVV Montazh CEO Vitalii Koval said.

Awarding a memorial plaque to Vitalii Koval

EU4Business-EBRD Line of Credit is a part of a broader EU initiative – EU4Business – being implemented in Ukraine to provide support to small and medium-sized enterprises. They will benefit from the access to an open market as part of the Deep and Comprehensive Free Trade Area / Association Agreement (DCFTA/AA).

It means that Ukrainian companies will be able to take advantage of their relatively low cost of workforce and product cost price to successfully compete with other companies in large European and regional markets, if their production processes are compliant with EU directives. The purpose of EU4Business-EBRD Line of Credit is to help companies realize these opportunities, in particular, using the mechanism of leasing new equipment compliant with international production standards via OTP Leasing with a grant component.

FYI: OTP Leasing planned to disburse the total of $100 million to finance equipment purchases, but have actually disbursed $180 million in 2018. Almost 50% of the company’s portfolio is financing of agricultural companies.


Source – Latifundist