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Grants

Grant or subsidised loan: free money that costs more than borrowing

"Free" and "no strings" are not the same thing, and the difference is measurable in money.

Updated 2026-09-17 7 min Figures carry a check date

The rate is not set by the bank

Ukraine's "Affordable loans 5-7-9%" programme runs three rates, and which one you get is determined by your numbers rather than by negotiation:

Rate Condition
5% p.a. turnover up to UAH 25m and at least 2 jobs created in the first quarter
7% p.a. turnover up to UAH 25m
9% p.a. turnover up to UAH 50m

For businesses in areas of high military risk a separate rate applies: 1% for the first five years, 5% thereafter.

Participant categories are set by annual income: micro up to €2m, small up to €10m, medium up to €50m.

Note the gap between five and seven percent. It is bought with the same job creation that grants impose as an obligation. The identical action lowers the rate in one instrument and becomes a repayment condition in the other.

The arithmetic that settles it

Equipment at UAH 1,000,000 over three years.

A loan at 7%. Roughly UAH 110,000 of interest across three years on even repayment. The money is yours; the single obligation is to pay on schedule. Stop trading and the debt remains, which is a real risk.

A grant of the same amount. Nothing to repay. But the conditions typically cover an operating period, tax payment and job creation at no less than the minimum wage.

Price one job. The UAH 8,647 minimum wage plus 22% social contribution is UAH 10,549 a month, about UAH 126,600 a year, over UAH 380,000 across three years.

So in this example the grant's obligation costs more than all the interest on the loan. Three times more.

That is not an argument against grants. It is an argument against comparing by headline sum.

The risks differ in kind, not size

A loan carries financial risk that arrives gradually. If trading worsens you can restructure, sell collateral, exit with smaller losses. The bank wants its money back, not your destruction.

A grant carries binary risk. Meet the conditions and you repay nothing. Fail them and you repay the whole sum, with a penalty. There is no middle state.

Which makes grants more dangerous for a business with unstable revenue. A loan hurts proportionally when sales fall. A grant does not hurt at all at first, and then demands back a million you no longer have.

Our position: if you need the job regardless of the grant, take the grant — the condition adds nothing. If you would hire only to satisfy the condition, price that person across the full term against the loan interest. The objection applies at larger sums: on three million, interest grows faster than the fixed cost of one job, and the arithmetic reverses.

Which suits whom

A grant — when the obligations match plans you already had, the business is stable, and you are confident of lasting the full condition period.

A loan — when you need flexibility, the grant conditions do not fit, or you fail the formal criteria.

Both — also an option: recipients under state grant programmes are often entitled to an additional investment loan at the subsidised rate.

Check current terms on the programme's official portal before deciding: rates and categories get revised, and secondary sources lag by months.

Verified 17 September 2026.

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