The National Bank of Ukraine and the German Bank for Reconstruction and Development Monday July 7 officially presented a new loan fund for small- and medium-sized enterprises.
The DM 10 million ($5.7 million) fund was borne of German Chancellor Helmut Kohls visit to Ukraine last year. The German government grant will be channeled through the NBU to commercial banks and on to individual businesses.
At a press conference, NBU Governor Viktor Yuschenko said the fund would help lay the foundation for private sector development.
The essence of this program is not merely to receive the sum, but to create a permanently functioning institution to support smalland medium-sized enterprises in Ukraine, he said.
German Bank for Reconstruction and Development Director Werner Frank, who also spoke at the press conference, said the program will operate along the lines of a similar fund in Germany.
The idea is to establish a revolving fund to finance small- and medium-sized enterprises over the long term, he said.
One of the first beneficiaries of the program is the Kyiv-based Lekon company, an agricultural product processing enterprise which received a DM 50,000 loan through a commercial bank. Very timely, is how Company Director Leonid Zhelnov described the advent of the program.
This fund gives us the short-term turnover funds we badly need, he said.
Zhelnov went on to say that another thing his business lacks is long-term credits for expansion. I hope that if our company proves reliable, they will give us such a loan, he said.
That is not in the cards just yet. The new fund is designed to issue short-term loans to businesses with less than 20 employees, small- and medium-sized enterprises, and German-Ukrainian joint ventures.
Businesses with less than 20 employees can receive up to DM 15,000 at the maximum interest rate of 23 percent, while smallsized enterprises can receive up to DM 50,000 at 18 percent, and medium-sized enterprises and joint ventures can receive up to DM 500,000 at 13 percent.
Commercial banks will pay 8 percent interest to the NBU.
This rate will help the fund to grow, said Claus-Peter Zeitinger, president of Internationale Projekt Consult, the German-agency supervising the fund.
He added that the rate will make it possible for commercial banks to extend credits on competitive terms.
Zhelkovs firm received its loan through Aggio bank at 13 percent interest. You cannot say its a privileged rate, but its not very high either, he said.
But he noted that the loan program will remain viable only so long as the hryvna, the national currency, remains stable.
