Over the past five years, and especially in the context of a full-scale war, the Ukrainian government has been actively implementing mechanisms to support small and medium-sized businesses to stimulate economic recovery, preserve jobs, and ensure access to financing for enterprises. One of the key instruments of such stimulation is government guarantees on loans on a portfolio basis, which are provided to banks to support entrepreneurs. This program has become an important factor in stimulating credit activity and strengthening the liquidity of the country's banking system.
What are portfolio-based government guarantees?
The portfolio-based government guarantee program is a mechanism by which the state guarantees part of the obligations of entrepreneurs from loans issued by authorized banks, which stimulates financial institutions to more actively provide loans to MSMEs (micro, small and medium-sized businesses). The Ministry of Finance of Ukraine nominated the following program conditions: “The state guarantee provides up to 50% of debt obligations for the loan portfolio and up to 70% for each individual loan”.
This means that the risks associated withnon-returnfunds from business credits are distributed between the bank and the state, which allows financial institutions to reduce their own burden of lending to risky but promising enterprises. This approach helps expand access to financing and also reduces barriers for business.
Volumes of state guarantees
The state guarantee program has been actively implemented since December 2020, and its effect is visible in the scale of financing issued. Updated data on lending volumes and program statistics are published by the portal Minfin.com.ua.
For the entire duration of the instrument (as of the end of 2025 - beginning of 2026):
- Authorized banks issued 52,312 credits totaling more than UAH 170.7 billion for small and medium-sized business entrepreneurs, partially secured by state guarantees on a portfolio basis.
- Of these, for the period of full-scale war — 47,162 credits on UAH 160.2 billion.
These data show that the program is repeatedly used and has a significant impact on the real volume of lending in the economy.
How does the mechanism work and why is it effective?
Portfolio-based government guarantees work as a bridge of trust between banks and entrepreneurs in conditions of increased risks. Banks receive a guarantee of partial coverage of potential losses, which reduces their fears about lending to small and medium-sized enterprises, which may have unstable financial performance during war or economic shocks. This mechanism also allows:
- Reduce the cost of lending for entrepreneurs, since part of the risk lies with the state.
- Encourage banks to actively work with sustainable businesses that require working capital or investment.
- Increase competition between banks who join the program.
As a result, businesses gain access to cheaper and more affordable financing, which is especially important in times of economic uncertainty and high operational risks.
Banks participating in the program
33 banks in Ukraine joined the program, which significantly expanded the area of influence of state guarantees. According to the Ministry of Finance: “As of January 1, 2026, creditor banks service 21,589 loans worth 76.2 billion hryvnias.” In particular, among the most active banks are the classic market leaders:
- PrivatBank— almost 13,939 credits.
- Oschadbank — 3,179 credits.
- Ukrgasbank — 1,000 credits.
These indicators indicate that large banks play a key role in the actual implementation of the program and provide lending to enterprises in various regions and industries.
Impact on the economy and banking system
From the perspective of the economy as a whole, the portfolio-based state guarantee program contributes to the viability of small and medium-sized businesses, which are one of the main drivers of economic growth. Access to financing helps enterprises preserve jobs in times of crisis, and also stimulates investments in the development and modernization of production, creating additional economic incentives. Providing loans supports the stability of the business environment and forms the basis for the restoration of production chains.
In the banking sector, state guarantees limit default risks, which increases the confidence of financial institutions in issuing new loans. They also contribute to reducing the share of problem assets, as part of the risk is concentrated on the state, not just on banks' balance sheets, and help maintain banks' liquidity through more efficient portfolio management.
Conclusions
Mechanism of government guarantees on loans on a portfolio basis has become one of the key financial instruments supporting business in Ukraine during the war and post-war recovery. The program has provided billions in loans to tens of thousands of entrepreneurs, lowered barriers to raising financing, and has become a significant factor in strengthening both economic activity and banking liquidity.
These results confirm that comprehensive credit support policy, which combines state guarantees with the active role of banks, can be an effective tool for stimulating economic growth even in the most difficult times, creating the prerequisites for recovery and long-term development.
