It will be paid out in three instalments over 2.5 years with a maximum maturity of 15 years, an EU statement said.
The International Monetary Fund's board earlier this month signed off on a $17.5 billion loan for Ukraine. That will be combined with $7.5 billion in loans from other international organizations and an expected $15.4 billion in debt relief that Ukrainian officials hope to negotiate with bondholders.
The European Commission will work out an agreement with Kyiv, laying down economic policy and financial conditions for the EU loan, focusing on structural reforms and sound public finances, the EU statement said.
An EU document approving the loan said Ukraine faced balance of payments and liquidity problems, worsening finances due to the cost of the conflict, a deeper-than-expected recession and loss of tax revenue from separatist-controlled areas.
"At the same time, pre-existing structural weaknesses and budgetary and external financial vulnerabilities have also contributed to the deterioration of the economic situation," it said.