Fund for Partial Guarantee of Loans in Agriculture was created in Ukraine

The European Union and the World Bank Group, together with the Ukrainian government, launched the Fund for the Partial Guarantee of Credit in Agriculture. As noted in the press service of the World Bank, this initiative is aimed at supporting small farmers who cultivate land plots with an area of up to 500 hectares. Its launch is an important milestone and a key element of the second stage of the land reform, which started on January 1, 2024.

The Fund provides guarantees to Ukrainian banks covering up to 50% of the borrower's obligations under investment loans and working capital loans to support small farmers who own or use agricultural land up to 500 hectares. Selected borrowers can receive working capital loans for up to three years, investment loans for up to seven years, and land purchase loans for up to 10 years. The maximum loan amount is equivalent to $800,000 per borrower.

"Small farmers registered in the State Agrarian Register will be able to access the Fund's guarantees and take advantage of other state programs. Among them, in particular, bank programs aimed at supporting small farms by providing affordable loans, such as the current lending program "Affordable Loans 5-7-9", the press service said.

Currently, in order to gain access to the Fund's guarantees, a farmer must be registered in the State Agrarian Register. By creating the Partial Loan Guarantee Fund, the World Bank Group and the European Union demonstrate their strong support for the long-term prosperity of agriculture in Ukraine. In order to meet the basic financial needs of small farmers in the conditions of the Russian invasion of Ukraine, the Fund will solve such important issues as the acquisition of agricultural land, financing of agricultural machinery and equipment, as well as meeting the operational needs of small farms. The Fund is sufficiently capitalized to start operations thanks to a grant of 10 million euros provided by the European Union for the World Bank Project "Strengthening the Fund for Partial Credit Guarantees in Agriculture".

It should be noted that the Cabinet of Ministers of Ukraine has already made changes to the procedure for providing financial state support to agricultural producers. This was reported by the representative of the Cabinet of Ministers in the Verkhovna Rada, Taras Melnychuk. According to him, the Government has extended by one year the crediting period of business entities - agricultural commodity producers under concluded credit agreements until March 31, 2025. The Cabinet of Ministers has introduced a mechanism for providing partial guarantees to banks for credit obligations of small and medium-sized enterprises operating in the field of agriculture. The government also redefined the term "zone of high military risk", which provides for a temporary extension of the preferential terms of the procedure for providing financial state support in such territories from one year to three. Changes were also made to the Procedure for the implementation of the experimental project on the verification of subjects of the agro-industrial complex in the conditions of martial law in order to prevent abuses by the subjects of the agro-industrial complex during the export of certain types of agricultural products. The list of grounds for exclusion of an agro-industrial complex entity from the list of verified agro-industrial complex entities has also been expanded.

Let's add that in less than a month, Ukrainian farmers received UAH 1 billion of "available loans". According to the Ministry of Agrarian Policy of Ukraine, since the beginning of 2024, 375 Ukrainian agricultural enterprises have already received UAH 3 billion in bank loans for the development of their own business. 264 enterprises received UAH 1 billion from the total amount under the state program "Affordable loans 5-7-9%". The largest volume of loans under various programs in the current year was received by agrarians of Kyiv (UAH 1.6 billion for 38 enterprises), Kharkiv (UAH 194.7 million for 20 enterprises), Chernihiv (UAH 161.5 million for 16 enterprises), Lviv (145 million UAH for 31 enterprises), Dnipropetrovsk (110.8 million UAH for 22 enterprises) and Vinnytsia (108 million UAH for 33 enterprises) regions. In addition, under the program "Affordable loans 5-7-9%", enterprises of four regions received the most: Kharkiv region - UAH 186.7 million (allocated to 19 enterprises), Kyiv region - UAH 128.9 million (for 27), Lviv region - 127 UAH .6 million (for 21) and Vinnytsia – UAH 92.6 million (for 25).