One in three businesses in Ukraine is on the verge of closing
More than half of small and medium-sized businesses in Ukraine scaled back their operations during the first five months of 2026. According to the study’s findings, nearly one in three businesses is already on the verge of closing.
The average efficiency rate for SMEs fell to 83.8% compared to the same period last year. One of the main reasons was a sharp decline in profitability. Nearly 85% of the entrepreneurs surveyed reported an average increase in operating expenses of 19.1%.
The greatest burden on entrepreneurs fell on three categories of expenses:
utility services (electricity and gas)—64.2% of companies reported price increases;
logistics and transportation—63.4%;
wage costs—60.4%.
At the same time, weak demand prevents businesses from offsetting these costs by raising prices. As a result, over 61% of businesses reported a decline in profitability, and 13.5% became unprofitable.
The main obstacles to development—war and labor shortages
Analysts at Advanter Group note that the main obstacles for businesses are not so much economic or purely military factors as the high level of uncertainty and the actions of government agencies.
The top three most critical barriers included:
Unpredictable government actions that could worsen the state of business—56.5%.
General unpredictability of the situation in the country and in the market — 53.9%.
A shortage of qualified personnel—50.5%.
The problem of the labor shortage is closely linked to the mobilization and reservation system. Currently, an average of 10.1% of a company’s full-time employees are serving in the Armed Forces of Ukraine. At the same time, only 5.8% of companies have managed to fully reserve all necessary specialists. Nearly 30% of businesses were denied, and another 53% did not even attempt to go through the procedure due to the absence of the relevant category of activity (22.9%) or complex bureaucracy (19.5%).
Among complaints about interactions with government agencies over the past two months, entrepreneurs most frequently cited the blocking of tax invoices (19.9%), unscheduled audits (16.1%), and refusals to grant exemptions (15.9%).
Businesses are trying to adapt but are stuck in a downturn
The UBI Business Activity Index rose to 34.8 points in June 2026 (from 32.9 in March). Despite a slight recovery in the manufacturing sector, the index remains well below the 50-point mark, indicating that negative expectations persist.
A company’s “age” plays a key role in its survival:
Younger businesses (established after 2022) have proven to be the most resilient—their workload stands at 94% of 2025 levels, and capacity utilization reaches 66%.
Long-established businesses (founded before 2014) are performing worse—at only 82% of last year’s volume.
Money is needed, but not at market rates
To survive and offset losses, businesses are seeking financing, but market-rate loans remain unpopular. Although the banks’ approval rate for loan applications is decent (74% of applicants receive loans), 28.9% of entrepreneurs are fundamentally unwilling to take out loans at any interest rate right now. The majority (58.4%) will only accept preferential interest rates (up to 10% per annum).
Companies direct the bulk of their loan funds not toward development or opening new locations (only 13.9%), but rather toward replenishing working capital (38.0%), purchasing equipment (32.4%), and securing autonomous power supply (25.4%).
86.9% of Ukrainian entrepreneurs pin their main hopes for an improvement in the business climate on the end of hostilities and the achievement of peace, and among domestic reforms, the strongest demand is for a radical overhaul of the tax system (47.9%) and attracting international investment (47.7%).
This is evidenced by the results of a study conducted by the Advanter Group analytical center.
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In the first six months of 2026, Ukrainians paid 94.2 billion UAH in military tax to the state budget. This is nearly 26% more than during the same period last year. The largest amounts came from taxpayers in Kyiv, Dnipropetrovsk, Lviv, and Kharkiv regions.
