Revitalizing Ukraine's Small Businesses with Grants: A Case of Available Opportunities
In the current disastrous reality, Ukraine's small businesses have found a ray of hope through government and foreign grants. A prime example is the transformation of a micro business that produces frozen meat products, showcasing the crucial support provided by the KSE IOM Consulting Initiative for Ukraine's small enterprises.
Amidst the disruptions of war-induced supply chain issues and inflation, the "Workshop for the Production of Semi-Finished Products" faced mounting difficulties. This micro business is engaged in producing certified frozen meat products. However, the war aftermath severely impacted their operations, leading to logistical nightmares, increased costs, and energy shortages.
Seeking a solution, Andriy Grebinnyk, the business owner, turned to government grants facilitated by the KSE IOM Consulting Initiative. Recognizing the potential for both immediate relief and future growth, he strategically allocated the grant funds. These funds were directed towards procuring essential raw materials, packaging, and modern equipment.
Navigating the complex landscape of grants and financial planning required expertise. Industry expert Mykhailo Lutskiy provided crucial insights, enabling Andriy to optimize the use of grant funds, navigate intricate tax nuances, and plan for the future with renewed confidence.
As the competitive landscape swelled with unlicensed home-based enterprises offering lower-quality products, Andriy’s commitment to quality stands as a powerful differentiator. His dedication to excellence, fortified by strategic grant utilization, solidified his business's position in the market.
Consultation 1
During the initial consultation, Mykhailo initiated the discussion by proposing the provision of a grant application template for future use. He delved into details about the tax implications of granted funds, shedding light on the nuances of taxation for sole entrepreneurs versus corporations. The topic of business-related vehicle purchases was explored, with the revelation that such acquisitions could potentially serve dual purposes, transitioning from business use to personal after fulfilling their professional role.
Andriy clarified that all received funds are channeled back into his business. Mykhailo emphasized the importance of tax-efficient practices and how specific financial decisions could align with broader business goals.
Consultation 2
In the subsequent consultation, a review of recently applied grants formed the basis of discussion. The mechanics of receiving and utilizing won grants were outlined, emphasizing the need to maintain transparent business accounts detailing equipment acquisitions and their associated costs. Mykhailo committed to sharing additional grant opportunities post-session.
Andriy contributed insights concerning the potential benefits of collaboration and network utilization for enhancing outcomes. Mykhailo expounded on the gap between the grant approvers' perspective and the unique circumstances of businesses seeking grants. Andriy underscored the necessity of sourcing raw meat from reputable suppliers to ensure consistent quality.
Addressing the challenges of strategic purchasing under grant constraints, Andriy expressed his uncertainty about long-term procurement planning when grants necessitate it. The importance of risk assessment was discussed, with Andriy highlighting the disjuncture between theoretical approaches and practical application in the real world.
Consultation 3
In the third consultation session, Mykhailo and Andriy delved deeper into the subject matter. A review of recent grant opportunities revealed their limitations based on geographical regions and business sizes. The duo engaged in a discourse about the delicate balance between reducing product prices and upholding quality, especially in the face of competition from unlicensed home-based enterprises. These enterprises were noted for selling directly to retail outlets, often at lower quality standards.
The consultations highlighted the complexities of day-to-day operations, from tax considerations and grant management to competition and product quality. Through these discussions, Andriy's journey demonstrates the intricate web of challenges and strategic considerations that small businesses must navigate to thrive in a dynamic economic landscape.
A Blueprint for Other Entrepreneurs
The story of this micro business serves as a shining example of the transformative power of government grants in Ukraine's challenging economic climate. This journey showcases how grants not only address immediate challenges but also lay the groundwork for sustained growth. Andriy’s experience provides a blueprint for other small businesses, guiding them to leverage government support, navigate adversity, and emerge stronger against even the most daunting challenges.
Exploring Available Grants for Ukrainian Small Businesses
In addition to the case study, here's a glimpse of some grants currently available for Ukrainian small businesses:
1. USAID SME Business Grants: In May, USAID started accepting applications for small and medium-sized (SME) business grants, targeting family and women-owned businesses. Grants range from $10,000 to $35,000, totaling $1.5 million. USAID's support has aided nearly 7,500 SMEs in manufacturing, information technology, and agriculture since the war's onset, creating or retaining around 75,000 jobs and attracting $31 million in private sector investment.
- More Info: https://www.usaid.gov/ukraine/economic-growth
2. Grants for Small and Medium-sized Processing Enterprises: Applications for grants supporting innovative transformation and development in Ukrainian processing SMEs are open from July 3 to December 15, 2023. The grants are part of the USAID program "Competitive Economy of Ukraine" (KEU).
- More Info: https://www.prostir.ua/?grants=hranty-dlya-pidtrymky-malyh-ta-serednih-pererobnyh-pidpryjemstv
3. Ukrainian Startup Fund's Big Grant Wave: Funded by the European Union and the German government, the Ukrainian Startup Fund is offering financing of up to 25,000 euros each for 30 small and medium-sized enterprises. This initiative supports businesses creating innovative products, services, or aiming to expand their export capabilities.
- More Info: https://business.diia.gov.ua/cases/granti/ukrainski-kompanii-zmozut-otrimati-do-25-000-evro-na-rozvitok-biznesu
4. IOM Grant Program for War-Affected Micro and Small Enterprises: The IOM grant program aims to restore jobs, production, and provide essential goods and services. Microenterprises can receive up to 4,500 euros, and small enterprises up to 20,000 euros in hryvnia equivalent at the UN exchange rate.
5. Investment Voucher for Dual-Purpose Projects by Lviv City Council: This program supports SP individuals and individual entrepreneurs registered within Lviv City Council's territory. It targets innovative dual-purpose projects related to health, security, and defense, offering financial assistance of up to 300,000 UAH.
- More Info: https://www.investoffice.lviv.ua/support-programs/56
6. Business Voucher for Veterans by Lviv City Council: This voucher, worth up to 300,000 UAH, is available for veterans, their spouses, and those interested in starting or expanding businesses in light industry, furniture production, agriculture, healthcare, and household services.
- More Info: https://www.investoffice.lviv.ua/support-programs/55
7. EU4Business Grants for Micro-Business Recovery: This program, funded jointly by the European Union and the Federal Ministry for Economic Cooperation and Development of Germany (BMZ), offers grants of up to 4,000 euros to Ukrainian enterprises affected by conflict and occupation.
- More Info: https://www.investoffice.lviv.ua/support-programs/52
8. USAID Grant Program for International Trade Participation: The USAID "Competitive Economy of Ukraine" program is offering grants ranging from $35,000 to $90,000 to support Ukrainian businesses' participation in international trade events.
- More Info: https://www.investoffice.lviv.ua/support-programs/44
9. Grants for Export Alliances by USAID KEU: USAID KEU is set to provide around $1.5 million in grants, ranging from $35,000 to $150,000, to support the formation and activities of export alliances in Ukraine.
10. "Talents for Ukraine" Grant Program: The "Talents for Ukraine" program offers grants of at least $5,000 to small businesses located in the Lviv, Ivano-Frankivsk, Rivne, Ternopil, Volyn, or Chernivtsi regions. It focuses on businesses that provide humanitarian aid and contribute to these regions' development.
- More Info: https://foundation.kse.ua/talents-for-ukraine/aplikatsijna-forma/
These grants collectively provide a lifeline for Ukraine's small businesses, offering support for growth, innovation, recovery, and resilience.
The story of Andriy’s enterprise and the range of available grants underscore the resilient spirit of Ukrainian entrepreneurs and the significant impact that government grants can have on their journey to success.
