The EU provides SMEs with access to cheap loans

Olha has founded the company with two friends 14 years ago, having only $100 each in their pocket. At that time, the business idea seemed to be a risk. Now she is the director of the company, Ukrainian manufacturer of orthopedic and medical goods.

The company produces 87 kinds of orthopedic products and more than one hundred various compression knitwear products. For years, the company has been looking for opportunities to increase production, since the demand for their products is significant.

However, they did not have enough working capital to purchase the necessary equipment. A high bank rate in Ukraine (above 20%) did not allow attracting the necessary funds on credit.

In the summer 2018, while riding in a car, Olha heard on the radio about the restoration of lending for small and medium-sized businesses under EU4Business initiative through the German-Ukrainian Fund (GUF).

GUF implements the programme of the Second Phase of the SME Financing Facility under EU4Business initiative funded by the EU and Germany through the German state-owned development bank KfW.

“We have long dreamed of buying German compression knitwear equipment, even negotiated with its manufacturers,” the businesswoman says.

EU4Business med_1.jpg
Photo: German-Ukrainian Fund

Under the EU4Business programme, the interest rate on the loan is 15%, in addition, the 50% of the nominal interest rate set under loan agreement is compensated for the SMEs by the Kyiv City State Administration (KCSA).

The woman says that after the radio program she has made only one call and talked about her project. The program gave Olha the opportunity to get access to the lowest interest rate in Ukraine:

“In as little as two months German partners have designed special equipment for us. It cost us about 90,000 euros. Now, we have to pay 7.5% of the amount provided for 6 years. Another 7.5% is paid by the KSCA,” the businesswoman says.

According to Olha, investments allowed the company to increase production, improve product quality and create additional jobs.

“An additional work shift appeared at the production facility, and our technologist traveled to Germany for training,” Olha tells proudly.

In less than one year after the loan was granted, the company increased its turnover and began to export goods to Belarus, Poland and Estonia.

 

This article was prepared within the framework of the project “EU Neighbours East”. The views expressed in this article belong solely to the author.

 

By Uliana Bukatiuk 

Source – Espreso

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