Monday09 December 2024
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Grant for Your Own Business: How the Government Program Works and Who is Eligible for Funding.

The Ministry of Economy shares success stories of individuals who have received government grants in its press releases. However, the numerous rejections faced by budding entrepreneurs remain unaddressed, as do the government's demands for the repayment of granted funds to the budget.
Грант на бизнес: как функционирует государственная программа и кто может получить финансирование.

The main reason for failures is the non-fulfillment of grant application requirements, according to the State Employment Center. Who receives funding for business development, and in which sectors do Ukrainians most frequently attempt to become entrepreneurs?

Conditions for Receiving the "Own Business" Grant

Within the framework of the "Own Business" project, Ukrainians can receive a grant of up to 250,000 UAH. The primary condition of the government program is to create jobs by starting a new business or expanding an existing one. The state provides up to 75,000 UAH to individuals who need to register as individual entrepreneurs (FOP), up to 150,000 UAH for creating one job, and up to 250,000 UAH for creating two or more jobs.

Additionally, starting in October, entrepreneurs under the age of 25 can apply for grants of up to 150,000 UAH to open their own business without the requirement of creating a job. These new conditions apply to young people who are not individual entrepreneurs.

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Entrepreneurs from Kharkiv region can apply for an increased grant amount of 500,000 UAH. However, the state does not provide funds for creating or expanding businesses operating in temporarily occupied territories or combat zones.

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Funds must be used within six months of receipt and reflected in the business plan. The money can be spent on purchasing equipment, buying raw materials, paying rent (no more than 25% of the grant), marketing and advertising services (no more than 10% of the grant), leasing, and acquiring licensed software (no more than 50% of the grant), as well as equipment rental (up to 10% of the grant).

Funding is provided on a non-repayable basis. It is expected that these funds will return to the budget in the form of taxes and fees. After receiving the grant, the recipient must operate their business for at least three years. The state issues grants not for just any business. Prohibited sectors include tobacco cultivation, production and sale of alcoholic beverages, life insurance, and real estate and transport leasing.

Which Businesses Ukrainians Open Most Frequently

By August, Ukrainians had received over 17,300 grants under the "Own Business" program, totaling nearly 4.2 billion UAH. According to the Ministry of Economy, entrepreneurs most often received funds for businesses in wholesale and retail trade, automobile and motorcycle repair (32.5% of all grants), temporary accommodation and food services (16%), and manufacturing (15%).

The least popular sector was mining and quarrying. Over more than two years of the program's operation, only one grant of a quarter million UAH was issued for this type of economic activity. Additionally, the activities of domestic workers proved to be unpopular, with only three grants of 250,000 UAH issued.

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The most businesses were opened in the Lviv region, where over 2,800 entrepreneurs received grants totaling 680 million UAH. The second place went to Kyiv, where 1,900 entrepreneurs received grants amounting to 472.6 million UAH.

Grants were even received in Donetsk region, while in Mykolaiv and Kherson regions, the state most frequently funded projects in agriculture.

How to Apply for a Grant

First, you need to carefully plan your business strategy and create a business plan. This plan should describe the business idea, its advantages, and organization, state objectives, budget items, and justify them, describe the target audience, and analyze the market. An example of a business plan can be viewed at the link.

Applications are submitted through the "Diia" website, which can be done in 20 minutes. The application must include personal data, residence address, education, place of business, income level, affiliation with national public figures (in which case the grant cannot be obtained), and attach the business plan.

After the application is submitted, a check of the potential grant recipient's business reputation begins. They are checked for any enforcement proceedings related to debt collection or bankruptcy, seized property, and tax debts. The state verifies whether sanctions have been imposed against the applicant or if they are involved in fraud cases. Additionally, the commission considers the credit history and absence of corrupt activities. Checks can take up to 15 working days.

The next stage is an interview with regional employment centers. During the interview, the candidate's motivation, understanding of the business plan, marketing and operational plans (personnel, taxes, equipment), and previous experience are assessed. More details on preparing for the interview can be found in a special manual.

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The decision to grant a grant is made based on the number of points the applicant has scored. The maximum score is 250, of which 200 can be awarded based on the business reputation check results, and 50 based on the interview results.

Grants are awarded to recipients who have scored the highest points. Applications are submitted in waves. Each wave has a specific budget limit, within which grants are provided. For example, if 100 million UAH is allocated for one wave, grants of 250,000 UAH can be awarded to a maximum of 400 applicants.

After the application is approved, within 20 working days, the recipient must contact Oschadbank or Privatbank to open an account and sign an agreement for receiving the grant. In some cases, the business plan may be sent back for revision. If this happens, the applicant has 15 days to make corrections. The opportunity to revise the business plan can only be used once. If the grant is not awarded, the applicant can prepare a new business plan and apply again.

Why Entrepreneurs Return Grants

There are instances when entrepreneurs are required to return grant funds to the state. The Ministry of Economy identified two main reasons: non-utilization of the grant within six months of receipt and the inability to implement the business plan. Cases of returning funds are not uncommon. For example, in the third quarter of 2023, one-third of grant recipients partially returned funds to the state.

Between April and May 2024, 27.44% of grant recipients partially returned funds to the state – 27.6 million UAH from the allocated 516.6 million UAH. The State Employment Center cited other reasons for fund returns, including non-fulfillment of the program's primary requirement – employment of people.

"Six months after receiving the grant, the first monitoring visit by specialists from regional employment centers occurs. They check whether the grant recipient has employed people," explained the State Employment Center.

If job creation has not been achieved, the grant recipient must return the funds in full. The employment center's commission records the non-fulfillment of the requirement in an act and presents it for signature to the business owner. The commission then issues an order for the return of funds and sends a claim to the grant recipient.

There is a month to return the funds. They should be transferred to the same account that received the grant. If this is not done on time, the issue will be resolved in court. Funds can be returned in installments by entering into a corresponding agreement with the bank.

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