Affordable financing for SMEs is vital to Ukraine’s recovery. SMEs make up 99.8% of businesses, provide 74% of employment, and generate 64% of value added in the country. Due to the war, SMEs have faced severe disruptions. But despite extraordinary challenges, financial remains a key barrier. Limited working capital, scarce investment financing, high interest rates, and strict collateral requirements hinder SMEs’ ability to maintain operations, invest in growth, and strengthen resilience. 

The challenges are most severe for vulnerable groups, including SMEs in war-affected areas, internally displaced persons (IDPs), war veterans and their families, women- and youth-led enterprises, persons with disabilities, returnees, and small farms. They face limited or restricted access to formal financial services, higher borrowing costs, and exclusion from credit, insurance, and investment opportunities. 

To address these disparities, many financial actors have integrated inclusion objectives into their operations, aligning them with recovery agenda and large investment programmes. KSE Institute assesses state, EU, international partner, and commercial bank programmes, with particular attention to the Ukraine Investment Framework (UIF). It examines how financial instruments and institutions support Ukrainian SMEs, with a focus on vulnerable groups. The goals are to map financing availability and to evaluate how inclusive these mechanisms are in practice and how they can be improved. 

Key takeaways aimed on:

• Improving alignment of financial instruments with SME needs;

• Enhancing awareness of available financing opportunities; 

• Strengthening institutional capacity to deliver accessible and inclusive products.

High-level recommendations covering the interests of all vulnerable groups:

• Expanding and geographically targeted risk-sharing instruments;

• Simplifying lending procedures and collateral reform;

• Strengthening financial literacy and awareness campaigns;

• Improvement of integration of NBFIs and local institutions;

• Introducing outcome-based performance monitoring to link support with tangible business growth.

Recognising that uniform financial tools cannot address diverse wartime vulnerabilities, tailored recommendations are provided for each vulnerable group. 

View the detailed recommendations in the full version of the study.

The study “Advancing Inclusive SME Finance in Ukraine: Pathways for Supporting Vulnerable Entrepreneurs” was funded by the British Embassy in Ukraine as part of the project “Ukraine’s Economic Recovery Programme” implemented by the KSE Institute.