Defense manufacturers to access leasing at 5% annually as the state introduces a preferential support mechanism

The Cabinet of Ministers of Ukraine adopted a resolution drafted by the Ministry of Defence establishing state financial support for defense industry enterprises through financial leasing agreements. 

The program provides for a reduction in the lessor’s remuneration. This enables defense industry enterprises classified as critical to economic functioning during the special period to gain access to vehicles and equipment at reduced rates. This will substantially ease the financial burden on businesses that support the military. 

“We are creating a mechanism that reduces financial leasing costs for defense manufacturers to just 5% per year under financial leasing agreements, with the state covering the remainder. This will allow companies to invest in scaling up production, upgrading equipment, and responding more quickly to the military’s needs. The initiative will complement the affordable lending program for defense manufacturers launched last November,” said Anna Gvozdiar, Deputy Minister of Defence of Ukraine. 

The reduction of leasing payments under the state support mechanism will be delivered via authorized lessors (banks and leasing companies) that meet the criteria set out in the resolution, once they have implemented the required internal products. The Ministry of Defence will separately announce the specific institutions that will provide defense manufacturers with leasing services on preferential terms in accordance with the approved resolution. 

The support will be extended to finance activities associated with the development, manufacture, repair, modernization, and disposal of weapons, military and special equipment, and ammunition, for the following purposes: 

• acquisition and modernization of fixed assets of enterprises, including equipment, dual-use equipment, and technological facilities;
• acquisition of vehicles for manufacturing and commercial purposes;
• acquisition of non-residential real estate for the conduct of business activities by enterprises. 

Financial leasing agreements eligible for state support must meet the following conditions: 

• the maximum financing amount per agreement shall not exceed UAH 500 million (or the equivalent in foreign currency);
• the maximum term of the agreement shall not exceed five years;
• the maximum rate of the lessor’s base remuneration shall not exceed 23% per annum;
• the one-time fee for the provision of leasing services shall not exceed 0.75% of the financing amount.