Keeping Ukrainian SMEs operating and bolstering banks’ resilience during the war

Repeated attacks on energy infrastructure during Russia’s full-scale war on Ukraine have impacted small and medium-sized enterprises (SMEs) across the country. Power outages have not only disrupted their operations, but also resulted in higher operating costs and lost revenues. At the same time, elevated levels of risk as a result of the war have reduced banks’ appetite for lending and raised the cost of credit. Companies need access to fast, reliable financing to support business continuity, but funding has been increasingly difficult to access. Meanwhile, local banks require risk mitigation in the face of heightened credit risks, economic disruption and uncertainty that has tightened risk‑taking capacity.

Since the start of the war, the EBRD has acted quickly to mobilise finance for businesses and households across Ukraine, while also strengthening the resilience of the financial sector.

The Bank has significantly scaled up its support for partner financial institutions (PFIs) and SMEs, providing a combination of direct lending, risk sharing and technical assistance to bolster their resilience and increase banks’ capacity for continued lending at a time of heightened uncertainty and disruption.

The EBRD has acted through three main programmes:

• intermediated lending through the Eastern Partnerships SME Competitiveness and Inclusive Programme (EaP SMECI)
• portfolio risk sharing (PRS) and individual risk-sharing frameworks (RSFs)
• the Energy Security Support Facility (ESSF), an energy-security-focused PRS product.

At the end of 2025, a total of 12 PFIs were benefiting from EBRD support through these programmes, enabling the Bank to support the resilience of Ukrainian banks and to reach private Ukrainian businesses and individuals at scale. The Bank had also become the largest provider of finance in Ukraine under these instruments – even beyond the government’s portfolio guarantee programmes.

Under the EaP SMECI, the Bank has enabled on-lending to Ukrainian SMEs, while also supporting business skills and capacity with advisory services. By the end of 2025, more than €110 million had been disbursed to veteran-, women- and youth-led businesses in Ukraine, as well as to other war-affected business segments, directly reaching more than 1,300 micro, small and medium-sized enterprises (MSMEs). Meanwhile, thanks to the European Union (EU) and other donor contributions, supporting grants are also helping to cover 10-30 per cent of investment costs, making financing more accessible for local businesses. This intermediated lending approach has helped local PFIs to boost their SME lending capacity, with partner banks increasing their SME portfolio well beyond EBRD financing.

The EBRD enabled approximately €2.5 billion of financing across more than 30,000 subloans to Ukrainian borrowers between the start of the war and the end of 2025 by covering 50-80 per cent of the risk on individual subloans through PRS instruments. The Bank has further enhanced selected commercial banks’ capacity for on-lending by providing up to 65 per cent risk sharing for individual loans to SMEs under dedicated RSF agreements.

One PRS product, the ESSF, was launched in the fourth quarter of 2024 as part of the EBRD’s Resilience and Livelihoods Framework. It helps Ukrainian businesses, state-owned enterprises (including municipalities and municipal companies) and households to invest in low-carbon and renewable energy generation, storage and efficiency solutions. The PRS is complemented by guarantees, incentive grants and targeted technical assistance to identify, structure and implement projects, supported by donors including Canada, the EU, France, the Netherlands and the United States of America.

The ESSF (including the SMECI component) scaled up quickly, working with eight PFIs and facilitating €682.5 million in committed financing capacity to support almost 1,700 subloans as at the end of 2025, with around two-thirds going to SMEs and a third to households.

The financing has helped enhance energy security by supporting investments in small- to medium-scale battery energy storage systems. Borrowers have also been able to improve their energy efficiency with ESSF support, helping to address long-term energy security and sustainability needs. An estimated 179.2 MW of renewable capacity has been added as a result of ESSF projects, leading to an estimated reduction in CO₂ emissions of 292,000 tonnes per year.

The EBRD’s support for financial institutions is underpinned by the EU through the Ukraine Investment Framework, including first-loss risk cover that improves the credit-enhancement capacity of EBRD guarantees.

The combination of portfolio risk-sharing instruments, individual risk-sharing instruments and intermediated lending have helped PFIs to keep credit flowing to firms, supporting the continued operation of SMEs and economic activity throughout the war. While heighted uncertain has tightened local banks’ risk‑taking capacity, the EBRD’s risk sharing is helping to overcome this market challenge, bolstering banks’ resilience.

EBRD support for the lending capacity of Ukrainian banks has also helped strengthen the country’s long-term energy security through the ESSF, demonstrating that Ukraine’s banking sector can finance decentralised energy solutions at scale, even in wartime conditions.

For example, the ESSF enabled Kherson Energo Group to invest in a solar plant to provide electricity supply to the city and region of Zaporizhzhya. The project has accelerated the region’s transition to renewable energy, resulting in energy savings of close to 30 million kWh per year and reducing annual CO₂ emissions by more than 12,000 tonnes.

Kherson Energo Group Director Olga Korzh said: “Construction of the solar plant allowed the company to preserve jobs and to contribute to restoring the independence of Ukraine's energy system.”

The ESSF also helped a newly established electricity producer, Integral Storage, to invest in a battery energy storage system. The company installed 2 MW and 4 MW battery storage facilities, enhancing grid stability while reducing its reliance on backup fossil-fuel generation. Participation in the ESSF helped the firm secure a five‑year contract with grid operator Ukrenergo to provide auxiliary services, supporting its financial and operational stability while also contributing to Ukraine’s energy security.

Integral Storage Deputy Director Andrii Vasyliev said: “Participation in the ESSF has allowed us to carry out activities aimed at increasing the resilience of Ukraine’s energy system, preventing power outages and ensuring uninterrupted electricity supply and consumption.”  Successful financing through the ESSF to date is accelerating the replication of investments in renewable energy and battery storage solutions across Ukraine and supporting the continued operations of SMEs.

• In crisis settings, portfolio risk‑sharing can be an effective way to maintain and scale SME credit while preserving banks’ underwriting discipline.
• Combining finance with targeted technical assistance is crucial for scaling newer technologies, such as battery storage.
• The diversified list of eligible energy projects under these financing programmes (generation, storage and efficiency) helped firms to tailor their activities to local grid constraints.