Since 2011, FSVC has supported Ukrainian commercial banks to provide critical lending to small and medium-sized businesses to spur economic growth through a partnership with WorldBusiness Capital (WBC), and a credit guarantee mechanism through the U.S. Overseas Private Investment Corporation (OPIC).
With a young population, Ukraine urgently needs to create large numbers of sustainable new jobs. SMEs in Ukraine represent 98% of all enterprises and have the capacity to employ a significant portion of the workforce and create new jobs. Without access to long-term funding or working capital financing, however, start-up businesses and early-stage small businesses remain fragile and susceptible to high rates of failure. Additionally, 98% of Ukrainian SMEs remain unregistered and are unable to meet strict underwriting requirements to obtain working capital to operate or financing to grow their businesses.
- FSVC’s technical assistance program to Megabank in Kharkiv, Ukraine, began in 2011.
- FSVC’s technical assistance program to Bank Vostok in Ukraine, began in 2018.
- Thanks to the funds made available by WBC and a credit guarantee from OPIC to guarantee 80% of the risk of the SME portfolio, both programs focus on helping SMEs that would otherwise not have access to loans under local underwriting conditions.
- FSVC is providing customized consultations, on-the-job training and workshops implemented by seasoned professional bankers from the United States and/or other developed markets to strengthen the processes, policies and procedures of both banks in the area of SME lending. SME lending is generally considered higher risk from an underwriting perspective, due to the characteristics of the borrowers. FSVC’s work helps to introduce best practices in SME banking which help Ukrainian banks make proper credit decisions that ensure the quality of their loan portfolios.
- FSVC’s training and consultation programs in Ukraine have covered a wide range of SME lending related issues, including: advanced credit risk management practices; portfolio management and loan loss prevention; credit analysis and loan underwriting; and SME business unit strategic planning and operations.
- Over the past 9 years, Ukrainian SMEs have received approximately US$40 million of working capital financing through this lending program.
- Thanks to this program, previously unregistered SMEs have officially registered with Ukrainian authorities, and have actively contributed to Ukraine’s GDP through the business they have generated and the jobs they have created.