How the EU helps Ukrainian businesses overcome COVID-19

The COVID-19 pandemic caused huge changes at all levels, from economic development to business activity and private life. Businesses face unprecedented challenges: how to get adapted to new circumstances, stay afloat and retain the clientele.

That’s why we launch, jointly with the Delegation of the European Union to Ukraine, a special project about the opportunities which the EU offers to small and medium-sized enterprises to overcome the consequences of COVID-19.

This overview opens a series of publications about how Ukrainian companies change during the ongoing crisis and how the past or new experience in doing business with the EU helps them in that.

SMEs: the foundation of the Ukrainian economy

Small and medium-sized enterprises (SMEs) are responsible for over half of our country’s GDP, providing work to 82% of the able-bodied population of Ukraine. These are the enterprises having up to 250 employees and the annual turnover not exceeding 50 million euros.

Self-employed persons are also included to this category.

As a strategic and the largest trade partner of Ukraine, the European Union has been providing support of Ukrainian SMEs for over 10 years within the framework of EU4Business initiative. Today, far from being curbed, our cooperation is only strengthening.

Responding to COVID-19

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To overcome the consequences of the pandemic, the EU mobilized an urgent aid package for Ukraine worth over 190 million euros. The largest portion of this amount will be allocated for support to SMEs.

Matti Maasikas, Head of the EU Delegation to Ukraine, said: The EU works with international financial institutions, in particular, with the European Investment Bank. A large portion of funds from the EUs aid package for Ukraine will be spent on the needs of small businesses and farms. We want to make it available as soon as possible via Ukrainian banks.

“The EU continues to implement EU4Business support programs in Ukraine, in particular, to provide loans and grants for over 300 million euros. Some of these programs will be adjusted to overcome the consequences of crisis.”

Loyal terms will allow businesses to invest in development and get out of crisis.

The EU also started consultations with potential partners concerning implementation of new programs of supporting enterprises with the total budget of 20 million euros. Details of these programs will be made public soon.

On its part, the European Bank for Reconstruction and Development provided a EUR 15 million loan to the Ukrainian leasing company OTP Leasing for long-term lease transactions with SMEs across the country.

Financing is available in hryvnias and euros, but loans in the national currency will protect the borrowers from foreign exchange risks and have longer repayment periods.

For more useful information about how to act in the conditions of quarantine, visit specialized sections of the government Portal for Entrepreneurs and the Map of Opportunities for Small and Medium-Sized Enterprises from the EU, in particular, the section Information Support to Businesses during Covid-19. It contains news about programs of support to businesses, information about legislative changes, and useful online instruments.

Access to financing

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Existing cooperation programs are available simultaneously with new ones. First of all, EU4Business program continues to provide low-interest financing in hryvnias and foreign currencies via Ukrainian banks. Low-interest financing is available anywhere in Ukraine.

There are also regional programs offering a 50-percent refund of interest rate. Thanks to cooperation between Kyiv City State Administration, the Entrepreneurship Development Fund and EU4Business, businesses in Ukraine’s capital may receive a hryvnia-denominated loan at 6.5% APR.

Similar programs are also available in the Ternopil Oblast and in Bila Tserkva. In addition, this model lies at the core of the government program Affordable loans at 5-7-9%.

The EU devotes special attention to providing support to SMEs in the Ukrainian government-controlled territory of the Donetsk and Luhansk Oblasts.

FinancEast program, offering businesses in the Donbas a refund of 50 percent of the price of leased or financed agricultural machinery, equipment and motor vehicles, or of assembly, construction or reconstruction of facilities, has been on offer since З December 2019.

Financing has already been provided to almost 70 projects of micro and small enterprises, and this number continues to grow.

Access to knowledge and markets

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Besides loans, you can also receive expert consultations to find the way out of crisis, become more competitive, or enter new markets.

As part of EU4Business projects, EBRD refunds a half of the price of consulting services related to development of a website or marketing strategy, or implementation of international standards.

Monitoring and support continue for the project’s duration, and one year after the project’s end, an enterprise will be contacted to assess the results.

The results speak for themselves: 76% of customers were able to increase their turnovers by almost 50%. By the way, the overwhelming majority of projects are being implemented outside Kyiv.

Also, 15 Centers for Information Support to Businesses operate in regions with the EU’s support. There, you can receive a consultation, attend trainings and webinars, which for the duration of quarantine are held online free of charge.

Useful online resources

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Join Merezha online platform created with the support from EU4Business. It features over 100 registered business experts in various fields: marketing, export, certification, cost-effective production, finance, HR, systemization of business processes, franchising.

If you want to start an own business, visit the government info service Start Business Challenge developed with the support from the EU.

It contains step-by-step instructions for registration of more than 100 types of businesses, for example, a foreign language course, photo studio, web studio, kindergarten, restaurant, taxi service, mini bakery, family doctor’s office, mini market, car wash, beauty salon, mini hotel, solar power plant.

The current crisis became an unexpected occurrence for everyone, but this endurance test may also provide an impetus for changes and improvement of business.

Ukrainian entrepreneurs may count on the support from the EU, with which we will overcome the consequences of COVID-19 together.

We hope that this information will be handy and helpful for your business.

This special project was implemented with the support from the European Union under EU Communications in Ukraine project

Author: Andriy Avramenko

Source: Pravda