Principles of operation

Business Development Fund: Mission, Role and Institutional Development

Mission

The Business Development Fund (BDF) is a state financial institution whose mission is to provide affordable financing to micro, small, and medium-sized enterprises (MSMEs) in Ukraine.

The BDF facilitates entrepreneurs’ access to financial resources, support services, and targeted programmes, thereby contributing to private sector growth, job creation, and enhanced competitiveness of Ukraine’s economy.

Strategic role

The BDF acts as a second-tier financial institution and operates exclusively through banks and non-bank financial institutions as partners. Its activities are aimed at:

• support for MSME financing – providing affordable financing for entrepreneurs through a combination of different financial instruments: concessional loans, loan guarantees, interest rate compensation, and grant support to offset investment costs;
• support for the banking sector – building a sustainable infrastructure for long-term business financing;
• developing the competences of entrepreneurs – training and improving their financial literacy;
• cooperation with international partners – attracting financial and technical resources for the implementation of MSME support programmes.

Institutional development of the Fund

The BDF is entering a new stage of development – BDF 2.0 – aimed at transforming it into a national development institution. Key priorities include:

• Strengthening the Fund’s organisational and managerial capacity.
• Developing and implementing new strategic, business, and financial models.
• Increasing the efficiency of entrepreneurship support programme management.
• Creating innovative products for entrepreneurs in the fields of energy efficiency, digitalisation, and sustainable development.
• Expanding partnerships with international and private institutions.

History and legal status

• The BDF traces its origins to 1996, when Ukraine and the Government of Germany signed a grant agreement to launch a microcredit programme and establish the German-Ukrainian Fund (GUF) under the German Federal Government’s TRANSFORM programme.
• In 1999, in accordance with the grant agreement, the GUF was formally established with KfW Development Bank, the Ministry of Finance of Ukraine, and the National Bank of Ukraine as its founding members.
• In 2020, with the launch of the government programme ‘Affordable Loans 5-7-9%’, the GUF was renamed the Business Development Fund, retaining all rights and obligations of its predecessor.
• The sole owner of the BDF is the Government of Ukraine, represented by the Ministry of Finance.
• The BDF has non-profit status, with all income reinvested into lending and the development of MSME support programmes.

Financial Instruments and Programmes

The BDF implements entrepreneurship lending and support programmes based on the principle of revolving funds. The main instruments include:

• Loan programmes for MSMEs via partner banks.
• Interest rate compensation schemes.
• Special products supporting innovative, environmentally sustainable, and socially important projects.

These programmes are available across all regions of Ukraine through a nationwide network of partner banks and financial institutions.

Governance and Management

• Governing bodies: the General Meeting of Participants and the BDF Board.
• Executive management: Chairman of the Management Board.
• Independent Supervisory Board: established in 2025 as part of the institutional reform supported by international partners. It consists of three independent international experts and two state representatives. The Supervisory Board ensures strategic oversight, monitors efficiency and transparency, and oversees risk management.

Licences and Permits

• Licence to provide financial services (including financial lending).
• General licence of the NBU to conduct foreign exchange transactions