Loans in Ukraine – myths and reality


Many depositors ask us why we don’t take out loans. Let’s try to answer all of them in detail at once.

As soon as in January 2020 the government loudly announced the “5-7-9 Affordable Loan Program”, we immediately approached Ukrgasbank with the project.

In response, we received a seven-page list of what “certificates for certificates that we have a certificate” to prepare.

Thank you, the honest manager said straight up – your bail won’t work for us – because because because because. Otherwise, we’d have to smear paper for six months to get – no, not a fabulous loan, but a polite rejection.

In private conversations with bankers, they hear only one thing – this program does not work, and if someone got it, there is a huge kickback. And the government is already filling the tanks further – down to one percent annualized rates for those producing drugs.

Ahahaha, so we produce medicinal herbs – where’s our credit? Maybe some of the contributors can help us out. Or will take such a loan against our land to ourselves and we will grow together on our land? – We are ready to cooperate!

Okay, so what’s the reality? I came across an interesting example the other day. Online store sells MacBook laptop – 24,899 hryvnia. It also offers a one-year installment plan with a final price of 33,200 UAH. Plus there’s probably at least another 1% commission for sure.

That’s 33,532. We get 34.6% per annum – that’s the rate.

See for yourself online store “AVIC”

Now, about our business.

To get, let’s say, 1 million. we need:

1. Prepare standard documents, for example, the company “A-Project” asks for 75.000 UAH for it

2.Have the collateral appraised by an appraiser accredited by the bank – not less than UAH 20,000.

3.Insure the collateral – about UAH 20,000

4. Notary services – about UAH 10,000

But that’s not all. As you can see, the effective rate on consumer loans is 36%, so it is reasonable to expect at least 25% reality on secured commercial loans.

The period from sowing to the first sales (we are talking about spring, spring period, winter, winter is even sadder) – 4 months. So, given that the monthly interest will be UAH 21,000, we will need to set aside UAH 84,000 from the body of the loan.

Total we will get to use instead of a million 1000 000-75.000-20.000-20.000-84.000-10.000=791.000grn.

And we will get back 1250,000 hryvnias. Thus, the effective interest rate will be 58% per annum. Is the crazy fiddling with meaningless paperwork worth the loan at that rate and even with the collateral? And the bankers, through intermediaries, aka. “consultants” often take kickbacks – 5-10 percent. And the rate becomes (1250,000-691,000):691,000= 80% annualized.

That’s what I needed to prove

NO! We would prefer to take money from like-minded people and earn it together, without enriching various idlers and lackeys whose function in the production process is zero.

Do you have different numbers? A different opinion? Comment!


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