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In a combined effort, the European Bank for Reconstruction and Development (EBRD) and the German-Ukrainian Fund (GUF) have implemented the Ukraine Micro Lending Programme (UMLP). The UMLP aims to foster the development of micro and small enterprises through facilitating their access to bank loans on a permanent basis. Special attention is paid to a usually neglected and even maligned group: micro entrepreneurs engaged in small trade activities on local markets, which are mainly women and small production and service sector firms, which are typically turned away by banks. Programme implementation is supported by the
United States Agency for International Development (USAID), the European Union and German Kreditanstalt fur Wiederaufbau (KfW) in the framework of the German Government's TRANSFORM Program for Co-operation in Eastern Europe.
•• The background of the UMLP
It is known that micro and small enterprises (MSE) in Ukraine face numerous problems and obstacles, one of which is an almost total lack of access to credit from the banking system. This holds true for short-term working capital as well as for long-term investment capital. That is why the provision of credit lines by the international community to local commercial banks is of great importance.
•• Target groups
The Programme's target groups are, on one hand, Ukrainian micro and small enterprises and, on the other hand, commercial banks interested in receiving systematic technical assistance to prepare and train them for the task of micro and small business lending.
 A main task of the technical co-operation component is the establishment of a credit technology based primarily on the analysis of the entrepreneur's character and personal history, the quality of his or her business and the feasibility and profitability of the proposed project. Collateral-related aspects must not be neglected, but are deliberately placed last in the series of tasks, which the loan officers must undertake. It is highly valued and encouraged that the borrower takes personal responsibility for the loan of his business. Taking into consideration unofficial income of the business - and thus analyzing the client's whole socio-economic sphere, including his or her private financials - is an integral part of the financial analysis. In Ukraine, especially micro enterprises are usually forced to hide a significant part of their income in order to stand a chance to develop their business in face of red tape, criminal organizations, high and frequently changing taxes and imperfect laws and regulations that tend to criminalize small business activities, especially trade.
 The key to success of a target group-oriented credit Programme is training local loan officers. With the help of advisory technical assistance provided by the European Union and the German Government's TRANSFORM Programme, micro and small lending departments are set up in the participating Ukrainian commercial banks. The partner bank and its Consultant select the loan officers jointly. The training of the new loan officers, subsidized by the international donors in its initial stages, is provided mainly "on the job" by the advisor together with the partner bank, but also entails theoretical courses.
Technical co-operation efforts are also directed at introducing efficient loan processing procedures, including efficient rules for delegating responsibility within the partner banks. Specifically, this will involve the establishment of a credit committee consisting of qualified staff members who are capable of rationally discussing and assessing the risks associated with particular loans and eventually coming to an appropriate decision on whether to lend or not. Consequently, partner banks on the one hand take 100% of the credit risk, and on the other hand are entitled to interest margins that allow for profitable micro lending activities - a main pre-condition for achieving sustainability.
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