At the initiative of the Ministry of Defence of Ukraine, preferential lending opportunities for defence industry enterprises have been expanded. The maximum loan amount for working capital financing has been increased from UAH 100 million to UAH 500 million.
The Cabinet of Ministers of Ukraine has adopted the relevant resolution.
The new terms will enable Ukrainian manufacturers to access more financing to support their production cycles, purchase components and materials, and scale up the production of weapons and military equipment.
“The growth of Ukraine’s defence industry capabilities directly depends on enterprises having access to sufficient financial resources. The new terms give manufacturers greater opportunities to ensure uninterrupted fulfilment of government contracts, scale up production, and increase the output of Ukrainian-made weapons,” stated Anna Gvozdiar, Deputy Minister of Defence of Ukraine.
The terms of preferential lending depend on the loan amount and purpose, as well as on whether the company has an active government contract.
Lending to Defence Industry Enterprises with Active Government Contracts
For enterprises that are fulfilling a government defence contract at the time of applying for a loan, the subsidised interest rate will be 5% per annum.
Such manufacturers will be able to borrow up to UAH 500 million for working capital, but no more than the value of the government contract currently being fulfilled.
This will enable enterprises to obtain the financing needed to purchase materials and components and support the production cycle before the contract is completed and payment for delivered products is received.
Terms for Defence Industry Enterprises without Government Contracts
For enterprises that are not fulfilling a government defence contract at the time of applying for financing, the subsidised interest rate for working capital loans will depend on the loan amount:
- up to UAH 200 million – 5% per annum;
- from UAH 200 million to UAH 400 million – 7% per annum;
- from UAH 400 million to UAH 500 million – 10% per annum.
For investment loans, the subsidised interest rate of up to 5% per annum remains unchanged. A 5% annual rate will also continue to apply to preferential financial leasing agreements.
Preferential lending is one of the key instruments of government support for Ukraine’s defence industry. The programme provides manufacturers with access to additional financing for the development, production, repair, and modernisation of weapons, military and special-purpose equipment, ammunition, and their components.
As a reminder, the Ministry of Defence of Ukraine is implementing a preferential financial leasing programme for defence industry enterprises. The first 26 agreements have already been signed, with a total value of UAH 91.2 million.