The state, banks and financial companies offer SME financing for all tastes. But they are either difficult to access or expensive.
There are enough money offers for SMEs on the market. However, most of them are not so easy to implement in practice. Funding under government programs is the most profitable, but it is also difficult to access. Loans from non-banking companies, on the other hand, are quite affordable, but not cheap.
Government programs
Recently, the government program for lending to entrepreneurs “Available loans 5-7-9%” has been very hotly debated. But this is the case when there is more talk than lending. During the last week (June 15-22) under this program, domestic banks issued only 82 loans worth UAH 104.7 million. Thus, since the start of the program in February, businesses have received 721 loans worth a paltry UAH 509.4 million.
When the government announced the launch of the 5-7-9% program, it estimated its potential at 50,000 loans this year! In practice, however, each loan is issued with a squeak, sometimes under pressure from the Guarantor of the Constitution. For example, in early June, Volodymyr Zelensky called the newly appointed chairman of the board of Ukreximbank, Yevhen Metzger , who, by the way, is close to the President, live . Mr. Zelensky demanded that legal entities be exempted from paying on previously taken loans for one year. “People complain that you do not issue any loans. And also that the bank does not provide deferred payment of the loan. Zhenya, listen to me, this is not a question of one company, these are different companies. So, this is happening all over your country, ”the President said.
Eugene Metzger. Photo: Facebook
Earlier, at a meeting with the President, businessmen from the Khmelnytsky region reported on problems with loan restructuring. According to them, for a month they tried to restructure the loan, talking to members of the bank’s board. That’s how the Guarantor is forced to “squeeze” cheap loans. By the way, according to the press service of the Ministry of Finance, a loan under the program “5-7-9%” can be obtained in 16 banks. In addition to the four state-owned companies, these are FUIB, Kredobank, Alfa-Bank, TAScombank, Raiffeisen Bank Aval and Credit Agricole Bank. According to Ruslan Gashev, executive director of the Entrepreneurship Development Fund, which administers the program, expanding the range of authorized banks increases the number of entrepreneurs who have the opportunity to receive state support. However, it should not be ruled out that some players may join the program purely formally, as they say, for the company.
It should be noted that on June 17, the Cabinet of Ministers simplified business access to loans of the above program, easing the requirements for mandatory profitability of existing businesses and removing restrictions on the use of funds and the maximum loan amount. Thus, according to Prime Minister Denis Shmygal , the “5-7-9%” program has now become practically a program at 0% and allows small and micro businesses to refinance their existing loans.
“Nine banks have already signed agreements at 0% with a one-year deferral of repayment of the loan. “The program” 5-7-9% “has been transformed into a program of 0% for loans for small and micro businesses,” – said Mr. Shmygal.
Meanwhile, Ruslan Gashev notes that by introducing a refinancing instrument, the government has effectively transformed “Affordable Loans 5-7-9%” into a business support program that has suffered from quarantine measures introduced to combat the COVID-19 pandemic. However, the basic product of the program – investment loans – is still popular. “I think this is a good signal that Ukrainian business, despite the difficult times, is thinking about development and investing in it, ” said Mr. Gashev.
Ruslan Gashev. Photo: Facebook
In addition, the Cabinet of Ministers proposes to the Verkhovna Rada to support the New Money program, which provides for lending of UAH 5 billion. for micro, small and medium business. We have launched a program of cheap lending “5-7-9%”, but this is definitely not enough in quarantine and crisis conditions. Therefore, the Cabinet of Ministers proposes to the Verkhovna Rada to support the New Money program, we will be able to consider the possibility of issuing loans to small, medium and micro businesses at cheap interest rates, – announced the Prime Minister of Ukraine. ” And the state guarantees 80% of the body of the loan to the bank . “
Public and private banks
Many interesting credit programs for entrepreneurs are offered by state-owned banks. For example, PrivatBank’s program – KUB (“Country of Successful Business”) has been operating for several years, within which more than UAH 30 billion has been provided. (on average about UAH 10 billion per year). The program has several areas and provides lending to entrepreneurs and legal entities that have an account with PrivatBank and have been working in the market for at least a year.
If the entrepreneur already uses one of the CUB programs, he can apply for an increase in the loan amount, if the first loan was made three planned payments (30.0% of the initial loan amount) without delay and violation of credit conditions. It is mandatory to hire at least one additional employee after receiving a loan. In particular, for the development and scaling of a business project, it is proposed to finance working capital in the amount of 50 thousand UAH. up to UAH 1 million Funds are provided without collateral, by transfer to a current account. The interest rate will be 1.6% per month of the loan amount (19.2% per annum) – for the first six months and 1.4% per month of the loan amount (16.8% per annum) – for the next six months. In addition, for the period from May 25 to December 31 of this year, the current rate will be reduced by 0,2% (for all agreements and for all clients, except for those in which credit holidays / debt restructuring agreement are or will be in force, as well as those with overdue debt). Repayment is made monthly in equal installments.
Investment loans are issued in the amount of 200 thousand to 3 million UAH. for a period of one to five years. The interest rate is 17% per annum. Due to quarantine, rates are reduced by 1% (but not less than 15%) automatically for all agreements and for all clients, except those in which credit holidays / debt restructuring agreements are or will be in force, as well as those with overdue debts .
Some private banks are ready to lend to SMEs for any needs without collateral in the amount of up to UAH 1 million. for up to three years. Promise to draw up quickly with a minimum package of documents. Such cash loans for business.
But unlike cash loans for individuals, which can cost up to 100% per annum, the interest rate on business loans is about 20% per annum. Legal entities need a guarantee from the owners. For individuals – entrepreneurs (FOP) surety is not required. There is a possibility of early repayment and the possibility of refinancing loans from other banks. In addition to the passport and TIN, FOPs must provide the following documents:
- extended current account statement for the last 12 months;
- photos of the business and the tax return of the single tax payer of a natural person-entrepreneur.
Legal entities provide financial statements (forms # 1 and # 2): for the last reporting quarter and for the last reporting year (if the report is submitted once a year – for the last reporting year), as well as an extended statement from the servicing bank account for the last 12 months per month. You also need business photos.
Non-bank offers
Allrise Finance Company offers a business development loan, which allows the borrower to increase existing production capacity, as well as purchase long-term assets – real estate, vehicles, equipment and more. The loan is provided to legal entities and individuals – entrepreneurs who have more than six months of business experience.
The possible loan amount is from 700 thousand to 20 million UAH. for up to two years. The loan rate depends on the customer’s credit rating and starts at 24% per annum. In addition, it should be borne in mind that the one-time fee for the loan will be 1.5-2.0% of its amount. Also, during the loan application, the following additional costs will be incurred: collateral valuation (from UAH 1,000); collateral insurance (from 0.05% of the appraised value of the collateral); payment for notary services – 0.1% of the appraised value of the pledge; from 3500 hryvnias. – for registration of collateral.
Collateral is required. This may be residential or commercial real estate, vehicles, equipment or other liquid assets. The type of collateral depends on the loan amount that the borrower can count on. In particular, you can apply for a loan of up to 70% of residential real estate and only 50% – of the cost of equipment. The interest accrued on the loan is paid monthly, the body of the loan – individually for each client.
There are a few simple steps you can take to get a loan. Apply, get a preliminary decision one day after providing the minimum business data. After that, the business will be inspected by the manager of the financial company. The final loan decision will appear within two days after the inspection. It will take another day to sign the papers and receive the funds.
The company claims that such a loan decision-making process is considered fast, lending conditions are transparent, without any hidden fees and charges. The individual repayment schedule takes into account the specifics of each client’s business. It is possible to pay the costs associated with the loan (commission and / or insurance payment), at the expense of credit funds.
However, there are financing offers on the market with more efficient decision-making.
In particular, FinStream promises to make a preliminary decision in three hours! And funding is provided within 48 hours after signing the contract. There is also a fair assessment of the business, taking into account the actual income of borrowers and a high chance of getting a loan. All forms of business are financed: from legal entities to freelancers and the self-employed.