Yuriy Draganchuk: Effective Credit and Financial Mechanisms to Support Business and Affordable Mortgages are Among the Main Priorities of the Ministry of Finance

State Programs "Affordable Loans - Financial Market Assessment" was a topic of the speech made online by Deputy Minister of Finance for European Integration Yuriy Draganchuk at the VII Legal Banking Forum.

In his speech, he spoke about the activities of the Ministry of Finance aimed at facilitating the access of small and medium-sized businesses to bank lending, as well as affordable mortgages.

“One of the main activities of the Ministry of Finance of Ukraine is the development and implementation of effective credit and financial mechanisms to support business and facilitate citizens' access to mortgage lending.

As for lending to micro, small and medium-sized businesses, first of all, it is the State Program "Affordable Loans 5-7-9%", which is successfully implemented by the Government since February 2020.

In addition, at the initiative of the President of Ukraine in January of this year the Ministry of Finance developed and approved by the Government the program "Affordable Mortgage at 7%", which should start this spring, "said Yuriy Draganchuk.

It is important that the control over the implementation and administration of both state programs is entrusted to the Entrepreneurship Development Fund with the projected funding in 2021 in the amount of UAH 2 billion.

It should be noted, that the program "Affordable Loans 5-7-9%" is characterized by state financial support of business entities in the form of compensation of interest on loans and guarantees by the Fund.

"The State Program "Affordable Loans 5-7-9%" strengthens the competitiveness of Ukrainian micro, small and medium-sized businesses by facilitating access to financial credit resources, which, in turn, stimulates the activity of the banking system in terms of short- and medium-term lending to such businesses,"  the Deputy Minister of Finance for European Integration emphasized.

He also spoke about the additional actions of the Ministry of Finance jointly with the Fund under the program to support the business during the quarantine restrictions and overcome their consequences.

"To support the business during quarantine under the State Program "Affordable Loans 5-7-9% the interest rate for borrowers was additionally reduced, as well as the program was extended to businesses that already have loans. This has reduced the debt burden on entrepreneurs and expanded their access to sources of working capital.

In addition, new anti-crisis products have been introduced, including refinancing of previously received loans and issuance of new loans aimed at financing working assets on quite attractive terms," Yuriy Draganchuk said during his speech.

He noted that at the beginning of this year the range of participants in the program "Affordable Loans 5-7-9%" was expanded. Currently, medium-sized businesses with an annual income equivalent of up to EUR 20 million can apply for loans. A new instrument has also been added in the form of state guarantees on a portfolio basis, which should become additional support for banks' activity in lending to SMEs.

"As of the beginning of February this year, under the State Program "Affordable Loans 5-7-9%" the Entrepreneurship Development Fund has concluded cooperation agreements with 25 banks.

The number of applications for participation in the Program has reached 64,642 totaling UAH 80.9 billion, which is 1938 (totaling UAH 3.2 billion) more than in the previous period.

Over the last week, authorized banks have issued 200 loans totaling UAH 523.1 million.

Since the start of the Program "Affordable Loans 5-7-9%", authorized banks have issued 8,630 loans totaling UAH 20.2 billion," Yuriy Draganchuk said.

Particular attention during his speech was paid to the issue of reducing the cost of mortgage loans for citizens, which became possible due to the recently approved by the Government of Ukraine program of mortgage lending, developed by the Ministry of Finance. It was about the preconditions of the "Affordable Mortgage at 7%" program launched in January this year, its main benchmarks, the prospects for the participation of banks, etc.

It refers to the primary and secondary housing markets, in particular, individual houses that were put into operation after 2017.

"We are convinced, that the program "Affordable Mortgage at 7%" will be a powerful impetus to revive the housing mortgage market, which has not been very popular among banks in recent years.

We hope that most banks will restore or form their own new mortgage lending products to participate in the new program, this spring," said Yuriy Draganchuk.

The key conditions of the program are as follows: the maximum mortgage amount is UAH 2 million. The loan maturity is 20 years and the first contribution is 15% of the value of the mortgage; the normative area of housing will be 50 square meters of total living space for a single citizen or a family of two and 20 square meters for each subsequent family member.

A wide range of Ukrainian citizens will be able to take advantage of the new program "Affordable Mortgage at 7%".