When it was introduced in January 2020 at President Volodymyr Zelensky’s initiative, the 5–7–9% loan program was heralded as a way of making entrepreneurship accessible to ordinary Ukrainians.

The premise was simple. Banks would lend money to small and medium businesses at market rates. The government would cover part of the interest payments so that the borrower only had to pay 5, 7, or 9 percent on their loan — instead of the 11%- plus cost of unsubsidized borrowing.

Nearly two years on, banks have loaned $2.6 billion under the program and the government disbursed about $230 million so far.

Banks insist that the program is crucial to help the private sector, but experts claim that much of the funding shores up the budgets of established firms.


Conditions to qualify for 5–7– 9% financing were made too strict, experts said, and most startups didn’t qualify because they had no assets to put down as collateral.

Financial expert Oleksiy Kushch is skeptical of the program’s real value to the economy.

“They would have been better off giving the money to pensioners,” he told the Kyiv Post.

Anti-crisis loans

Johannes Andersen is a Danish national and former Kyiv Post employee who lives in Ukraine and runs Faro, a small business producing premium foods for supermarkets.

He told the Kyiv Post that the inability to find loans under reasonable conditions hampers his business and cripples the wider economy.

“The lack of access to capital has been stalling the economy for decades,” Andersen said. “It is one of the main factors preventing an overall post-Soviet, post 1990s recovery.”

The 5–7–9% program was intended to deliver a much-needed cash injection into an economy notorious for its high cost of capital.

The scheme allowed companies with a turnover of over $1.9 million to borrow money from banks at a rate of 9%, while businesses with a turnover under that amount would pay between 5 and 7% interest. The more employees a business had, the lower the rate.


Although Kushch has long been a supporter of a subsidized loan program, he said the 5–7–9% scheme should be stopped and is not fit for purpose as the money does not go to the right places. Only $300 million has been loaned to new businesses.

“Approximately one third of the loans go towards refinancing older debts,” he said. “There is no multiplier effect for the Ukrainian economy from this.”

Rodion Morozov, deputy board chairman at UkrGasBank, agrees that overall, too much of the 5–7– 9% capital goes to refinancing. He is keen to point out that of the $150 million his bank has loaned under the scheme, only $28 million has gone on paying down old debts.

“At some point, the scheme went wrong because several banks started to refinance their own loans at 0%,” he told the Kyiv Post.


In June, 12 banks signed a letter written by Raiffeisen Bank CEO Alexander Pisaruk, asking the government to stop loans issued since the start of the pandemic.

The letter criticized the scheme for giving loans to profitable businesses who didn’t need them, namely agricultural holdings who had a record year in 2020.


“According to Raiffeisen Bank’s own statistics, a typical (5–7– 9%) program participant can be described as a fully operational agricultural enterprise that has received an anti-crisis loan or refinancing,” the letter said.

As of Oct. 25, agricultural companies had received 44% of all the loans given under 5–7–9%, which amounted to over $1.1 billion.

“For the most part, such companies are quite resilient, have not suffered significant losses from the curtailment of business activity in 2020 and are trying to legally reduce their financial expenses.

”When asked about the letter, which UkrGasBank did not sign, Morozov voiced skepticism over the motives of the banks who signed the letter.

“It was funny to find out that this position was held by banks who were the most active in refinancing: It’s as if they said ‘we’ve got what we need, that’s it, time to stop.’”

In response to Morozov’s comment, Pisaruk told the Kyiv Post that the 5–7–9% program was the right tool to support businesses during the COVID-19 crisis. “The refinancing option was the most popular element of this program among clients of all banks,” he said.

“It was appropriate during the recession but should be scaled back once the economy returned to growth.”

Future loans


Morozov believes that the scheme is worthwhile despite the fact that refinancing loans were counterproductive and didn’t help the economy.

“It isn’t perfect, but the scheme is genuinely aimed at helping small and medium-sized businesses,” he said.

“The companies are carefully checked for connections to oligarchs and big businessmen, so that they can’t hide behind a small enterprise and get cheap loans that way.”

He pointed out that the scheme was expanded in October to include individual entrepreneurs and voiced hope that the program will continue after it receives “fine-tuning.”

“The government has spent about $230 million on this scheme so far… I don’t think it’s a vast drain on the budget,” Morozov said.

Disagreeing, Kushch said the project should be stopped, as its present inefficiency is destroying the likelihood of any future appetite to build a well-functioning loan subsidy.

“The people responsible for implementing this program used to argue against such policies before they came to power.”

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