Government measures in key jurisdictions 5th edition - Flipbook - Page 53
Germany
Contributor: HeukingKühn LüerWojtek
Loans and
financial
support
•
Bodo Dehne | b.dehne@heuking.de | +49 211 600 55 268
Michael Pauli | m.pauli@heuking.de | +49 221 20 52 421
Lending is available under a number of new schemes that have been introduced in
Germany. These range from schemes for large corporations to schemes for SMEs, startups, micro-enterprises and self-employed individuals. Some of the most relevant schemes
are:
–The “KfW Instant Loan” – this scheme provides funding to medium-sized enterprises
with more than 10 employees if the enterprise showed profits in 2019 or on average over
the last three years. The credit volume per company is up to 25% of the 2019 turnover
per business group but max. EUR 800,000 for companies with more than 50
employees, and max. EUR 500,000 for companies with up to 50 employees and a
maximum of EUR 300,000 for companies with up to 10 employees. The company must
not have been in difficulty as of 31 December 2019 and must have been in orderly
financial circumstances at that time. Since 9 November 2020, the "KfW Instant Loan" is
also available for self employed individuals and companies with up to 10 employees. Via
the companies’ principal banks, the companies can apply for these KfW loans with an
amount of up to EUR 300,000 depending on the turnover achieved in 2019. The federal
government assumes the full risk for this and releases the house banks from liability. The
KfW Instant Loan scheme is (currently) limited until 30 June 2021.
–The “KfW Special Programme” – this scheme was designed for medium-sized
enterprises and large companies and is now also available to companies of all sizes. It
aims at mobilizing the willingness of companies’ principal banks to grant substantial
amounts of loans to strengthen liquidity. Under this scheme, the German state-owned
development bank KfW assumes up to 80% of the risk, but no more than 50% of the
total debt for large-volume financing. KfW offers 90% risk assumption (indemnification)
for small and medium-sized enterprises (up to 50 million annual sales, fewer than 250
employees) and 80% assumption (indemnification) for all enterprises above this limit.
The indemnifications are backed by a full federal guarantee. The KfW risk share
amounts to at least EUR 25 million and is limited to 25% of the annual turnover in 2019
or double the wage costs in 2019 or the current financing requirements for the next 12
months for large companies or for the next 18 months for small and medium-sized
companies. The KfW Special Programme is (currently) limited until 30 June 2021.
–The “KfW Entrepreneur Loan” – this scheme aims at companies that have been on the
market for more than five years. The scheme shall increase their chances of being
granted a loan commitment. If they apply for a loan for investments and working capital,
the German state-owned development bank KfW assumes up to 80% of the bank’s risk
for large companies and up to 90% of the bank’s risk for SMEs. Companies can apply for
up to EUR 1 billion per company group. A similar
program exists for companies that have been on the market for less than five years.
Has the
government put
in place any new
bank funding
schemes?
•
State-owned banks also offer to guarantee loans provided to companies by their principal
banks if the company has not been in financial difficulties. Guarantees may cover max.
90% of the loan risk, i.e., the companies’ respective principal bank must assume at least
10% of exposure.
•
In addition to the programs of the federal government, each federal state has put in
place accompanying programs to support regional businesses.
•
To stabilise the real economy in times of the Covid-19 pandemic, the German parliament
has established an Economic Stabilisation Fund (“WSF”) as a special fund. The WSF shall
overcome liquidity bottlenecks and strengthen the equity base of companies. Instruments
of the WSF are (i) guarantees for debt instruments in the amount of EUR 400 billion to
bridge liquidity bottlenecks and support the refinancing of companies, (ii) EUR 100 billion
to strengthen capital through equity investments in companies (recapitalisation measures)
and (iii) EUR 100 billion to refinance KfW special programmes. Stabilisation measures
under the WSF are possible until the end of 2021 and shall be the last resort.
•
Establishing an economic stabilization fund for the real economy.
Government measures in key jurisdictions
53
