The Cabinet of Ministers Will Help Farmers with Loans Before Planting Season: How the Program Will Work
14 August 03:34
The Cabinet of Ministers has provided 19 banks with state portfolio guarantees totaling up to 20.8 billion hryvnia. Despite the agricultural focus of the government’s statement, these funds will not be paid directly to farmers. The state will partially cover the banks’ credit risks so that small and medium-sized businesses can borrow money even with insufficient collateral. This was announced by the Cabinet of Ministers of Ukraine. The Ministry of Finance also clarified the program’s terms, according to "Komersant Ukrainian"
The new decision is intended to expand businesses’ access to financing, particularly ahead of the fall planting season. The state guarantee may cover up to 80% of the obligations under a bank’s loan portfolio and for each individual loan.
What Do the UAH 20.8 Billion Guarantees Mean?
The government is not transferring 20.8 billion UAH directly into farmers’ bank accounts. Nor are these grants or non-repayable payments.
The Cabinet of Ministers provides banks with guarantees that cover a portion of potential losses on loans to micro, small, and medium-sized businesses. Thanks to this, financial institutions can approve loans for businesses that lack sufficient collateral to fully secure the loan.
In simple terms, the scheme works as follows:
- An entrepreneur or farmer applies to a bank for a loan.
- The bank assesses the borrower’s financial condition and creditworthiness.
- The loan may be included in a portfolio partially secured by a government guarantee.
- The government covers a specified portion of the bank’s credit risk.
- The borrower receives the funds and must repay them in accordance with the agreement.
The existence of a government guarantee does not exempt the entrepreneur from repaying the loan, interest, and other payments stipulated in the agreement.
How Much Will the Government Cover
The maximum level of government coverage is:
- up to 80% of the obligations across the bank’s entire portfolio;
- up to 80% of the obligations under each individual loan.
This does not mean that any borrower will automatically receive 80% of the loan from the government. The guarantee is provided to the bank and is used to partially cover credit risk.
The remaining risk remains with the financial institution, so banks will continue to verify customers’ financial status, income, credit history, and ability to service the debt.
Who Will Be Eligible for Loans
The program is designed for:
- microenterprises;
- small businesses;
- medium-sized enterprises;
- farming operations;
- agricultural producers;
- processing enterprises;
- trading and transportation companies;
- other businesses that meet the bank’s and the program’s criteria.
In other words, the new guarantees are not intended exclusively for agriculture. However, the government identifies farmers as one of the main target groups due to a shortage of working capital ahead of the fall fieldwork.
The bank makes the final decision regarding the loan, including its amount, term, interest rate, and required collateral.
Why Farmers Need Financing
The Ukrainian agricultural sector has faced a significant liquidity shortage due to Russian attacks on port and logistics infrastructure. Export difficulties are slowing down the sale of grain and other products, causing producers to receive payment later.
At the same time, farmers need to finance:
- purchasing seeds;
- purchases of fertilizers and plant protection products;
- fuel for agricultural machinery;
- repair and maintenance of equipment;
- wages;
- storage and transportation of the harvest;
- preparation for the fall planting season;
- allocating resources for the 2027 harvest.
According to Prime Minister Serhiy Koretskyi, due to shelling of the ports, the agricultural sector is unable to fully export its products and is experiencing a serious shortage of working capital.
Watch us on YouTube: important topics – without censorship
How Does a State Guarantee Differ from the “5–7–9%” Program?
State portfolio guarantees and the “Affordable Loans 5–7–9%” program serve different functions.
The “5–7–9%” program provides compensation for a portion of the loan’s interest rate. A portfolio guarantee, on the other hand, partially replaces collateral and reduces the bank’s risk.
Under certain conditions, both mechanisms can be applied to a single loan:
- “5–7–9%” reduces the interest burden;
- the portfolio guarantee helps resolve the issue of insufficient collateral.
However, the possibility of combining programs and the final financing terms must be clarified directly with an authorized bank.
How the program worked previously
The portfolio guarantee mechanism was launched in late 2020 and operates in accordance with Cabinet of Ministers Resolution No. 723 of July 14, 2021.
During its first five years of operation, Ukrainian entrepreneurs received over 52,300 loans totaling 170.7 billion UAH. More than 47,000 of these loans, amounting to 160.2 billion UAH, were issued during the full-scale war.
As of early 2026, the largest number of guaranteed loans were serviced by:
- PrivatBank;
- Oschadbank;
- Ukrgasbank;
- FUIB;
- Ukreximbank.
Agriculture was one of the leading sectors in terms of use of the instrument: farmers held 3,753 loans totaling 25.5 billion UAH.
Read us on Telegram: important topics – without censorship
