Ukraine's defense makers have signed the first 26 deals under a program that lets them lease or rent new equipment, with the right to subsequently purchase it into ownership, while the state covers most of the bill. The preferential-leasing scheme has channeled about $2 million so far, with producers paying just 5% of the leasing fee and the state covering the rest, the Defense Ministry said.

For many Ukrainian arms makers, the bottleneck is not orders but the cash to expand fast enough to fill them, Deputy Defense Minister Hanna Hvozdiar says, and the program is the state's answer.

Producers can lease equipment, machinery, automation equipment, transportation, and even factory space, paying 5 percent per year while the state subsidizes the rest, up to about $11 million per contract over five years.

The state covers most of the cost

Beyond capping the borrower's rate at 5 percent, the contracts can defer lease payments for up to a year, easing the squeeze while new equipment is bought and installed.

Only companies that hold "critically important" status in the defense sector, a label the state gives firms it deems essential to the war effort, can take part. The 26 deals are only the first, the ministry said, with the program still open to new applicants.

Three banks run the leasing

The Defense Ministry launched the program in April and named Ukreximbank, PUMB, and MTB Bank as the first authorized lessors, it said. In August, it spelled out what producers can lease, from machines, mobile production platforms, and technological gear to the non-residential real estate a plant needs to run.

Ukraine races to scale production

The leasing program is one piece of a broader drive to get money flowing to Ukraine's defense industry so it can produce more, faster. The government has been building financing tools around the sector, including a push by former Defense Minister Mykhailo Fedorov to raise the country's largest defense-tech venture fund.