Investing in Local Businesses: Regional Budget Support Programs for Entrepreneurs in Zakarpattia

A Special Report on Business Support Opportunities from the Regional Budget

Now in its third year since the full-scale russian invasion, Zakarpattia remains one of Ukraine’s most stable and deeply rear-guard regions. After the initial chaos of early 2022, when the Great war began, it became clear that the region needed to serve as a strong economic rear base. Ensuring business survival and stability became one of the biggest challenges and most important tasks during wartime.

As of August 2024, according to the regional Department of Economic and Regional Development, Zakarpattia region has approximately 50,000 registered individual entrepreneurs and around 6,000 small and medium-sized enterprises. Since the full-scale invasion, 282 businesses have relocated to the region and continue operating.

What regional programs and grants are available to support existing entrepreneurs or those seriously considering starting their own business? What assistance does the regional government offer to businesses struggling with the energy crisis and potential blackouts? What support can agricultural entrepreneurs expect from the region? These questions are explored further in this Varosh report.

Economic Support Programs and Grants

Currently, Zakarpattia operates a large Regional Program for the Development of Small and Medium-Sized Enterprises (2021-2024). One of its key focuses is support for veteran entrepreneurs, combatants, and their families, as confirmed by the Department of Economic and Regional Development of the Zakarpattia Regional Military Administration.

The program identifies 3 areas in which entrepreneurs can receive financial assistance from the regional budget:

1. Startup Competition – Funding is provided for launching new businesses.
2. Energy Help Program – Entrepreneurs can receive partial reimbursement for purchasing alternative energy sources such as generators, charging stations, batteries, solar panels, and inverters.
3. Domestic Producers Support Program – Within the framework of the state Affordable Loans 5-7-9% program, the region compensates interest on business development loans.

Startup Competition

The Startup Competition has been held by Zakarpattia Regional Military Administration since 2019. Its goal is to provide financial support to new businesses launched by local entrepreneurs.

In 2022, the competition was paused due to active military operations and uncertainty about the future. However, it was resumed in 2023.

The competition had a budget of 1 million UAH, funding 11 startups last year. In 2024, the overall budget nearly doubled to 2 million UAH.

Last year, 12 applications were submitted for consideration. This year, interest tripled, with 47 applications received between July 1 and July 30. The one-time financial grant for winners was also doubled this year: if last year the amount was 100,000 UAH, now applicants could receive 200,000 UAH.

The winners are selected based on the decisions made at committee hearings, where entrepreneurs present their business ideas, provide detailed insights, and explain their business plans. The competition is open to both novice and experienced entrepreneurs, but the key requirement is that their business idea must be a new venture rather than a continuation of an existing business.

Funding can also be obtained by individuals who have never previously been involved in entrepreneurship and are not registered as individual entrepreneurs. However, if their application is approved, they will need to officially register as individual entrepreneurs (FOP) in accordance with the competition rules. Special emphasis is placed on business ideas submitted by veterans, combatants and their family members, internally displaced persons, and residents of mountainous areas.

This year, based on the competition results, the specialized commission selected 12 startups out of 47. In particular, entrepreneurs received funds for launching a recording studio, producing fruit pastilles and snack bars, organizing a children’s judo sports section, creating a cultural space, and more.

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One of the winners of this year’s startup competition was the project Your Instructor. The project’s founder, entrepreneur Ivan Shpontak, received funding to purchase a car with an automatic transmission to provide private driving lessons for people who want to better prepare for the practical exam at the Ministry of Internal Affairs service center or improve their driving skills.

Ivan Shpontak is currently the director of the Uzhhorod National University driving school. He explains that in order for students to be allowed to take the exam at the service center, they must complete 40 hours of driving with an instructor. However, in some cases, this time is not enough to acquire the necessary driving skills. It also happens that a person who already has a driver’s license but has not driven for a long time loses confidence and driving experience.

This led him to launch a separate project, Your Instructor, where anyone can refine their driving skills and gain more confidence behind the wheel in a private setting.

The project also has a social component: the car purchased with startup funds will be used for training, including future drivers with disabilities. UzhNU driving school is currently the only one in the region certified to train people with disabilities. To ensure they can develop their driving skills, the vehicle was specially adapted before being put into operation.

The project’s instructors took their first routes in the new car at the beginning of December. Since then, 15 people have taken advantage of the opportunity to improve their driving skills through private lessons.

Energy Help Program

The Energy Help program was launched by the Zakarpattia Regional Military Administration last year during the blackouts. It aims to support businesses in covering the costs of purchasing and installing alternative energy sources.

Under the program, entrepreneurs are reimbursed for part of their investments in equipping businesses with generators, battery storage systems, charging stations, inverters, and even solar power plants. 40% is covered by the regional budget, 60% comes from the budget of the territorial community where the business is registered, and the compensation amount depends on the taxes paid by the business to the community’s budget at the location of its registration.

According to the regional Department of Economy, all data is verified with the tax authorities, and the more taxes an applicant has paid, the higher the compensation they will receive. Thus, the reimbursement amount varies in each case but will never exceed the total taxes paid by the business. Essentially, entrepreneurs receive compensation for alternative energy sources from the same taxes they contribute to the community budget. However, the financial burden is not solely on the territorial community, as part of the costs is covered by the regional budget.

Since the Energy Help program began in 2023, 216 entrepreneurs in Zakarpattia have benefited from it as of September 2024, with over 27 million UAH reimbursed for alternative energy sources.

The program remains active, and applications for compensation can be submitted through the Help Zakarpattia portal.

Support for Local Producers Program

Another state support tool available to businesses in Zakarpattia is the Affordable Loans 5-7-9% program, which provides interest reimbursement on business loans.

Under this program, entrepreneurs who take out bank loans to develop their businesses can receive partial compensation for the market interest rate from the state, reducing their loan payments to just 5%, 7%, or 9% annually. The exact rate depends on the business’s size, revenue, and commitment to creating new jobs.

In Zakarpattia, 5 million UAH has been allocated from the regional budget in 2024 to finance the preferential loan program. Entrepreneurs working in the processing sector are eligible to participate.

Industries such as food production, textiles, mechanical engineering, and metallurgy qualify as process manufacturing, making businesses in these fields eligible for interest reimbursement on loans taken for business development.

The reimbursement process works as follows: the entrepreneur takes out a loan from a bank and submits a set of documents to the regional economic department by the 10th day of January, April, July, and October. Compensation for preferential loans is also provided quarterly, by the 25th of the same months.

Similar to the Energy Help program, the interest reimbursement is jointly funded by the regional budget (40%) and the territorial community budget (60%) where the business is registered.

To ensure businesses are well-informed about the Affordable Loans 5-7-9% program, the regional military administration has created a dedicated information page. Applications can be submitted through the Help Zakarpattia portal.

Programs to Support the Agro-Industrial Sector

The regional administration identifies the agro-industrial sector as one of the key areas of the economy, accounting for up to 15% of the region’s gross value added each year.

Following the 1995 land reform, 89% of agricultural land has been privately owned or used by smallholder farms, while agricultural enterprises control only 11%. As a result, nearly 90% of the region’s total agricultural output is produced by household farms.

Due to Zakarpattia’s characteristic vertical zoning—including lowland, foothill, and mountainous areas—farming methods differ significantly across the region. The lowlands are well-suited for valuable dessert varieties of fruit and berry crops, as well as vineyards. Given the unique climatic conditions in the highlands, farmers there are increasingly specializing in animal husbandry, whereas crop production in this zone remains relatively limited. In the foothills, agricultural output is split almost evenly between crop production and livestock farming.

Since the onset of the full-scale invasion, the regional government has taken unprecedented steps to financially support local agricultural producers, explains Olha Perepelytsia, head of the regional Department of Agro-Industrial Development.

Currently, two regional programs are in place to support the agro-industrial sector: one for crop production and another for livestock farming. Between 2022 and 2023 alone, more than 32 million UAH was allocated from the regional budget to fund these programs—more than in the previous ten years combined. In 2024, over 36 million UAH has been earmarked for their implementation.

“In the past, we received only two or three applications per year for each program. Last year, that number rose to 29. This shows that people are beginning to trust the system and understand the effectiveness and efficiency of such support. We will continue encouraging farmers not to be afraid, to register as business entities, and to run their business with the backing of the regional government,” says Olha Perepelytsia.

Both the crop production and livestock farming support programs in Zakarpattia operate on a reimbursement basis. They provide business entities with the opportunity to receive compensation from the regional budget for expenses incurred in conducting their activities.

Support for Crop Production

Under the regional crop production support program, legal entities, individual entrepreneurs, and family farms can receive compensation for developing perennial plantations, improving soil fertility and irrigation, upgrading material and technical resources, developing infrastructure, and promoting organic farming.

Thanks to this program, agricultural enterprises engaged in growing grains, legumes, vegetables, berries, or maintaining fruit orchards can receive up to 80% reimbursement for purchasing agricultural machinery, specialized materials for operations, or watering and irrigation systems.

In 2024, a total of 28 agricultural enterprises involved in crop production will receive over 19 million UAH of compensation under this program.

Livestock and Agricultural Product Processing Support

The program for developing and supporting livestock farming and agricultural product processing enables entrepreneurs, farmers, and private farms to receive compensation in several key areas.

Specifically, the program reimburses up to 80% of the cost for purchasing and installing equipment for milk and meat processing at slaughterhouses, and acquiring facilities for poultry farming, milking parlors, fish farming, and beekeeping. Likewise, through the program, entrepreneurs and farmers engaged in livestock farming can receive partial compensation for the purchase of pedigree agricultural animals and bees.

Last year, the program provided partial reimbursement to 18 entrepreneurs operating in the livestock and processing sector who applied for partial reimbursement of the cost of purchased equipment and pedigree farm animals. Following the application process, they were approved for partial reimbursement of almost UAH 5 million.

How to Access the Programs

Applications for reimbursement under both programs are accepted annually by the Zakarpattia Regional Military Administration until October 15. The primary requirement for eligibility is that the applicant must be registered as a business entity within the region, explains Olha Perepelytsia.

“The official website of the regional administration provides an approved application form, which must be submitted along with the required documents to the Department of Agro-Industrial Development—either in person or by mail. The applications are reviewed by a specialized regional commission. If additional information or clarifications are needed, we return the documents to the applicant with comments for revision. The commission also conducts on-site visits to verify the applicant’s business operations. During these inspections, photo and video documentation is used to confirm what exactly the compensation from the regional budget will be used for and that the reimbursement will be used as intended,” says Olha Perepelytsia.

Dialogue Between the Government and Businesses

While not a direct financial program, another key initiative launched by the regional administration to support entrepreneurs is the Government-Business Dialogue. These are weekly online meetings where business owners can discuss problems, issues, and challenges related to entrepreneurship with government, institution, and organization officials.

Each session has a specific theme and takes place every Thursday from 3 to 5 p.m. Entrepreneurs can join via Zoom on the Help Zakarpattia portal using a permanent link.

The initiative was introduced to create a direct communication channel allowing entrepreneurs to voice their concerns and be given immediate consultations and clarifications from relevant officials and experts.

Some of the key topics covered in past sessions include military service exemptions for business owners during martial law, and available grant programs for businesses operating in wartime conditions. Since Zakarpattia is now considered a relatively safe region allowing tourism to still operate, a separate meeting was devoted to the specifics of the tourism industry in the face of a full-scale invasion. In light of the energy crisis triggered by Russian shelling, several meetings focused on discussing adaptation strategies and opportunities for businesses to secure government support for purchasing energy resources.

Materials from all the conducted “Dialogues” are freely available on the Help Zakarpattia portal. Therefore, if any entrepreneurs need to familiarize themselves with specific aspects related to their work, they can find answers to their questions here as well.

Tetiana Klym-Kashuba

Photo by Mykhailo Melnychenko

This material has been prepared within the framework of the Dutch-Slovak-Ukrainian project ‘Strengthening the Rule of Law at the Local/Regional Level in Ukraine: The Case of Zakarpattia Region’, which is implemented with the support of the Government of the Kingdom of the Netherlands under the MATRA program, a leading Dutch initiative for social transformation support.

The project is being implemented by the Institute for Central European Strategy (ICES) in collaboration with the Dutch organization Foundation of Justice, Integrity and Anti-Corruption (FJIAC) and Transparency International Slovensko (TI SK), in partnership with the Zakarpattia Regional State Administration and the Regional Council.

Important: The content of this material does not reflect the official position or opinions of the project’s implementers or donors. The content of the publications is the sole responsibility of Varosh.