Supporting Businesses During Wartime: Ukraine Finalizes Preparations for the First Disbursements Under the €40.5 Million KfW Grant

Progress and next steps in Ukrainian-German cooperation to support the development of small and medium-sized enterprises (SMEs) were discussed during a meeting between Yuriy Dragan­chuk, Deputy Minister of Finance for European Integration, and the German delegation led by Ulrike Hopp-Nishanka, Head of the Ukraine Task Force at the Federal Ministry for Economic Cooperation and Development of Germany (BMZ).

“Germany is one of Ukraine’s key partners in developing small and medium-sized businesses, advancing the institutional transformation of the Business Development Fund, and establishing the National Development Institution. We highly value Germany’s political support for Ukraine, its financial assistance, and its deep expert engagement. Thanks to our joint projects, we are not only expanding opportunities for Ukrainian businesses operating in wartime conditions, but also building a modern development institution aligned with the best European standards,” stated Yuriy Dragan­chuk.

He also expressed gratitude to the German Development Bank (KfW), the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), and the German Embassy in Ukraine, whose representatives took part in the meeting, for their continuous support and cooperation in the implementation of joint initiatives.

The Chairperson of the Management Board of the Business Development Fund (BDF), Andrii Hapon, highlighted the achievements of the joint SME support project:

“We observe significant progress in preparing for the first disbursements under the €40.5 million grant provided by KfW for the implementation of the SME Resilience Facility. The project aims to support small and medium-sized businesses in de-occupied and war-affected regions. Under the project, entrepreneurs will receive credit guarantees worth €20 million, concessional loans totaling €13.2 million, investment cost compensation amounting to €5.3 million, as well as €2 million in advisory support. The Business Development Fund is making every effort to ensure the professional and transparent implementation of the programme and expresses its appreciation to the German Government for proposing a second phase of the project worth €19 million,” he emphasized.

The parties also noted the significant progress achieved in strengthening the institutional capacity of the BDF, supported by BMZ. One of the key milestones was the deep involvement of KfW in the joint development of the Law on the National Development Institution (NDI), its strategy, and the future charter, which will undergo review by KfW and the World Bank.

Background

The Business Development Fund (BDF) is a state institution that implements support instruments for micro, small, and medium-sized enterprises, including the state programme “Affordable Loans 5-7-9%”, credit guarantee schemes, investment cost compensation programmes, and other financial instruments.

The Government of Ukraine, represented by the Ministry of Finance, is the sole participant in the BDF and oversees all key aspects of the Fund’s operations.

In 2025, the BDF launched an institutional transformation aimed at evolving into the National Development Institution (NDI), an entity aligned with leading European practices for economic development support.

On 28 October 2025, the Law on the National Development Institution entered into force, defining the institution’s new status, expanded powers, enhanced corporate governance standards, and a legal framework enabling broader cooperation with international partners. This paves the way for preparing the NDI for the EU Pillar Assessment, which will allow the institution to directly implement EU-funded programmes in the future.