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17 April 2020

For jobs and the econ­o­my: Im­me­di­ate As­sis­tance Pro­gramme and Eco­nom­ic Sta­bil­i­sa­tion Fund

Financial assistance to mitigate the effects of the coronavirus pandemic: You can find up-to-date information here on various types of financial assistance for employees, freelancers, self-employed individuals and companies of all sizes.

Multibillion-Euro programmes to assist all of Germany
Source:  Federal Ministry of Finance

The Federal Ministry of Finance is now providing direct support to employees, freelancers, self-employed individuals, micro-entities, small and medium-sized businesses and large companies. The German government has adopted multibillion-euro assistance packages specifically for this purpose. €50 billion in immediate assistance is being made available in the form of grants to small companies, self-employed businesses and freelancers. In addition, a new Economic Stabilisation Fund has been set up to provide large companies with liquidity support. These measures aim to safeguard jobs, bolster the economy and stabilise the real economy during the coronavirus pandemic.

The German government has adopted effective instruments to ensure that the economic effects of the coronavirus pandemic are mitigated to the greatest possible extent. You can find all the current information here.

Assistance for small companies, self-employed businesses and freelancers:

The coronavirus crisis poses a particular risk to the economic survival of self-employed individuals, micro-entities and small family firms. Even as their revenue losses mount, they still have to pay operating costs such as rental and leasing expenses. If they have reserves, these will be quickly exhausted. Moreover, these businesses often have no access to loans. The German government has adopted an Immediate Assistance Programme for micro-entities in all sectors of the economy as well as for self-employed people and members of the liberal professions. This programme will provide one-time grants with as little red tape as possible. These grants are meant to cover rental and leasing expenses in particular along with other operating costs such as loans for business premises. If a property owner reduces rent charges, any left-over money from the grant can be used for two additional months.

The programme is being implemented via the Länder, many of which have set up their own assistance programmes that can be combined with federal assistance. The federal government is making €50 billion available for this immediate assistance. Furthermore, insolvency rules are being modified. Businesses that experience cash-flow difficulties in the coming months due to the coronavirus will not have to declare bankruptcy for the time being.

Important notice regarding applications for immediate assistance:

This programme supplements other programmes that have already been adopted by the Länder. For this reason, Länder authorities will be responsible for handling all applications in order to ensure uniform procedures. On 29 March 2020, the Federation and Länder adopted an administrative agreement that sets out how applications can be filed with and processed by Länder authorities quickly and efficiently.

LandAuthority responsible for processing / approving applicationsLink (all links in German only)

Baden-Württemberg

Applications should be filed with the chamber of industry and commerce (Industrie- und Handelskammer) or the chamber of crafts (Handwerkskammer), which conduct a preliminary assessment; decision is made by the Landesbank

https://wm.baden-wuerttemberg.de/soforthilfe-corona

Bavaria

Local governments and city of Munich

https://www.stmwi.bayern.de/soforthilfe-corona/

Berlin

Investitionsbank Berlin (IBB)

https://www.ibb.de/coronahilfen

Brandenburg

Investitionsbank des Landes Brandenburg (ILB)

https://www.ilb.de/de/covid-19-aktuelle-informationen/aktuelle-unterstuetzungsangebote/

Bremen

Bremer Aufbau Bank (BAB)

Bremerhavener Gesellschaft für Investitionsförderung und Stadtentwicklung (BIS)

https://www.bab-bremen.de/bab/corona-soforthilfe.html

https://www.bis-bremerhaven.de/antrag-corona-soforthilfe.99067.html

Hamburg

Hamburgische Investitions- und Förderbank (IFB Hamburg)

https://www.ifbhh.de/magazin/news/coronavirus-hilfen-fuer-unternehmen

Hesse

Regional Commissioner’s Office (Regierungspräsidium), Kassel

https://wirtschaft.hessen.de/wirtschaft/corona-info/soforthilfe-fuer-selbststaendige-freiberufler-und-kleine-betriebe

Mecklenburg-Western Pomerania

Landesförderinstitut Mecklenburg-Vorpommern

https://www.lfi-mv.de/foerderungen/corona-soforthilfe

Lower Saxony

To be confirmed:

Investitions- und Förderbank Niedersachsen - NBank

https://www.nbank.de/Blickpunkt/Covid-19-–-Beratung-für-unsere-Kunden.jsp

North Rhine-Westphalia

Regional administrations in Arnsberg, Detmold, Düsseldorf, Cologne and Münster

https://wirtschaft.nrw/corona

Rhineland-Palatinate

Investitions- und Strukturbank Rheinland-Pfalz (ISB)

https://isb.rlp.de/home.html

Saarland

Ministerium für Wirtschaft, Arbeit, Energie und Verkehr des Saarlandes (Ministry of Economy, Labour, Energy and Transport)

www.corona.wirtschaft.saarland.de

Saxony

Sächsische Aufbaubank - Förderbank (SAB)

https://www.sab.sachsen.de/

Saxony-Anhalt

Investitionsbank Sachsen-Anhalt

https://www.ib-sachsen-anhalt.de/coronavirus-informationen-fuer-unternehmen

Schleswig-Holstein

Investitionsbank Schleswig-Holstein (IB.SH)

https://www.ib-sh.de/infoseite/corona-beratung-fuer-unternehmen/

Thuringia

Thüringer Aufbaubank

Chambers of industry and commerce (Industrie- und Handelskammer) and chambers of crafts (Handwerkskammer) are also accepting applications and conducting preliminary assessments.

https://aufbaubank.de/Foerderprogramme/Soforthilfe-Corona-2020

  • One-time grants of up to €9,000 for a period of three months (grants do not have to be paid back)
  • Applies to companies and self-employed businesses with up to five employees (full-time equivalents)
  • One-time grants of up to €15,000 for a period of three months (grants do not have to be paid back)
  • Applies to companies and self-employed businesses with up to ten employees (full-time equivalents)

The German government has allocated an additional €3 billion to provide self-employed people with easier access to basic income support. This will ensure that self-employed people can support themselves and pay for housing. Despite their loss of income, they will be able to remain in their current housing situation. Applicants for basic income support will not have to disclose or tap their assets in the coming months.

This special rule will apply for six months. To ensure that benefits can be paid out very quickly, applications will be provisionally approved, and means-testing will be conducted later.

Further information on basic income support during the coronavirus crisis is available (in German) from the Federal Employment Agency at https://www.arbeitsagentur.de/corona-faq-grundsicherung

Small businesses (including micro-entities) and self-employed people need to have quick access to liquidity during the crisis. For this reason, the German government is making significant funding available for loans that will be issued by KfW, Germany’s state-owned promotional bank. It is crucial during the crisis to ensure that loans can be obtained by businesses of all sizes: this includes self-employed individuals without employees, micro-entities, small and medium-sized businesses, and large companies.

The KfW special programme has been up and running since 23 March 2020. The programme has unlimited funds at its disposal, and the loans it offers are available to small, medium-sized and large companies. The conditions for taking out loans have been improved even further. Specifically, this means that the prerequisites for obtaining loans have been relaxed significantly to make sure that as many businesses as possible can receive fast and effective assistance. For example, the minimum creditworthiness requirements that KfW normally applies to companies have been eased significantly.

KfW will assume the bulk (80-90%) of the liability for these loans, with guarantees from the federal government. This will facilitate lending by banks and other financing partners. Processes are being simplified to ensure that loans can be paid out quickly. For example, for loans of up to €3 million, KfW will accept the risk assessments carried out by the applicant’s regular bank. For loans of up to €10 million, KfW will conduct a simplified risk assessment.

The various loan programmes will ensure that businesses can get help regardless of size or age.

KfW will forward these loans to recipients via their regular banks.

All established businesses that have been on the market for at least five years can apply for KfW Entrepreneur Loans (Unternehmerkredit). Newer companies that have been on the market for less than five years have access to ERP Start-up Loans (ERP-Gründerkredit).

The maximum loan amount for both of these categories is €1 billion. Various loan terms are offered and run for up to five years.

The loans can be used to finance investments or operating costs. Operating costs include, for example, rental costs and rent deposits for office and retail space as well as human resource expenses.

  • More information on KfW’s Entrepreneur Loan programme is available (in German) here.
  • More information on KfW’s ERP Start-up Loans is available (in German) here.

If you would like to apply for a loan, you can do this via your regular bank or another financing partner. Other financing partners aside from your regular bank could be commercial banks, public sector savings banks (Sparkassen), cooperative banks, direct banks, building and loan associations (Bausparkassen), insurance companies or financial intermediaries. Please note: It is not possible to apply directly to KfW for a loan.

Applying for a loan: a four-step process

  1. Find a financing partner
    Contact your regular bank or other financing partner and make an appointment. If you need assistance in finding a financing partner, KfW’s website can provide further guidance.
  2. File an application
    Applications for loans from KfW are filed by financing partners on behalf of self-employed individuals and micro-entities.
  3. Application review
    KfW reviews all documents and makes a decision.
  4. Conclude a loan agreement and receive liquidity
    Self-employed individuals and micro-entities conclude loan agreements with their financing partner. After that, the funding is disbursed.

Assistance for employees

The German government is expanding its short-time work scheme (Kurzarbeit), which provides compensation to workers whose working hours have to be reduced. The aim is to provide fast, targeted help if businesses experience work shortages during the coronavirus pandemic. Applications for the short-time work scheme are filed by companies, not by their employees. Access to this benefit is being granted with retroactive effect from 1 March 2020. This means that businesses can apply for access to the scheme now.

Further information on Germany’s short-time work scheme can be found here.

Assistance for small, medium-sized and large companies

The coronavirus pandemic is creating enormous uncertainty in the real economy. Due to the measures that governments are taking at the national and international level to slow the spread of the virus, companies are experiencing liquidity shortfalls or are even at risk of going bankrupt, through no fault of their own. If large companies were to go bankrupt on a wide scale, this would have significant social and economic consequences.

For this reason, swift and targeted government measures are imperative in order to protect companies and safeguard jobs and, in this way, to fend off long-term economic and social harm. To stabilise the real economy during the coronavirus crisis, the German government has adopted legislation establishing a new Economic Stabilisation Fund (Wirtschaftsstabilisierungsfonds). This fund is targeted towards large companies in particular and will be used to finance large-scale support measures in addition to the liquidity assistance programmes that have already been set up by KfW. These measures include government liquidity guarantees and steps to strengthen companies’ equity. The fund will be able to acquire direct holdings in companies. In addition, it will complement the established structures of the Financial Market Stabilisation Fund, which was set up during the financial crisis. Effective controls (including parliamentary controls) on the use of public funds will be ensured. In cases where the fund acquires holdings, conditions may be laid down such as rules on salary restrictions, dividend payments, the use of received funds and capital requirements.

The fund will focus on larger companies with over 250 employees, but it will also have the option to assist smaller companies working in the area of critical infrastructure or in critical economic sectors. The varied forms of assistance will provide companies with more options and greater flexibility, depending on their specific needs. The Economic Stabilisation Fund will use the following instruments to safeguard thousands of jobs:

  • Liquidity guarantees: guarantees totalling €400 billion to help companies overcome liquidity shortages. This will also make it easier for companies to obtain refinancing on capital markets.
  • Equity measures: authorisation to borrow up to €100 billion for direct recapitalisation measures in order to safeguard the solvency of companies. Such measures include, in particular, the acquisition of shares, silent participation rights, profit participation rights or subordinated debt instruments.
  • Refinancing: authorisation to borrow up to €100 billion to refinance the special programmes assigned to KfW.

Businesses need to have quick access to liquidity during the crisis. For this reason, the German government is making significant funding available for loans that will be issued by KfW, Germany’s state-owned promotional bank.

The KfW special programme has been up and running since 23 March 2020. The programme has unlimited funds at its disposal, and the loans it offers are available to small, medium-sized and large companies. The conditions for taking out loans have been improved even further. Specifically, this means that the prerequisites for obtaining loans have been relaxed significantly to make sure that as many businesses as possible can receive fast and effective assistance. For example, the minimum creditworthiness requirements that KfW normally applies to companies have been eased significantly.

KfW will assume the bulk (80-90%) of the liability for these loans, with guarantees from the federal government. This will facilitate lending by banks and other financing partners. Processes are being simplified to ensure that loans can be paid out quickly. For example, for loans of up to €3 million, KfW will accept the risk assessments carried out by the applicant’s regular bank. For loans of up to €10 million, KfW will conduct a simplified risk assessment.

The various loan programmes will ensure that businesses can get help regardless of size or age: this includes freelancers, self-employed people, small and medium-sized businesses and large companies.

KfW will forward these loans to recipients via their regular banks.

The loan programmes are set up according to company age and size.

Applications for loans from KfW special programmes for young companies and established companies must be submitted to the respective company’s regular bank. All established companies that have been on the market for at least five years can apply for KfW Entrepreneur Loans (Unternehmerkredit). Newer companies that have been on the market for less than five years have access to ERP Start-up Loans (ERP-Gründerkredit).

  • More information on KfW’s Entrepreneur Loan programme is available (in German) here.
  • More information on KfW’s ERP Start-up Loans is available (in German) here.

The maximum loan amount for both of these categories is €1 billion. Various loan terms are offered and run for up to five years. The assumption of risk by KfW has been raised further for loans granted under KfW special programmes. With liability waivers of 90% (for banks and Sparkasse savings banks), these loans can provide small and medium-sized companies with extensive financing to cover operating costs and investment spending. Operating costs include, for example, rental costs and rent deposits for office and retail space as well as human resource expenses. For larger companies, liability waivers are 80%. Prior to the coronavirus crisis, liability waivers were capped at 50%, and no liability waivers were provided for operating costs.

Furthermore, interest rates have been reduced on loans granted under the special programmes. They range from 1% to 1.46% annually on loans for small and medium-sized companies, and from 2% to 2.12% annually on loans for larger companies. This is a departure from KfW’s usual system for setting interest rates, which uses risk-based categories that take into account creditworthiness and the value of collateral provided.

The application process has been streamlined significantly: For loans of up to €3 million per company, KfW will refrain from conducting its own risk assessment. Rather, to accelerate the process, a risk assessment will be carried out only by the company’s regular bank. For loans of up to €10 million, KfW will conduct a simplified risk assessment . At the same time, documentation requirements for loan applications will be kept very simple.

Medium-sized and large companies can also access loans from KfW’s Kredit für Wachstum (“credit for growth”) programme. This programme is being expanded through the addition of a special programme called “Direct participation in syndicated lending” (Direktbeteiligung an Konsortialfinanzierung). Under this special programme, KfW will participate in syndicated loans to medium-sized and large companies. These loans will offer flexible financing arrangements to cover operating costs and investment spending. KfW will assume up to 80% of the risk on these loans, but no more than a 50% share of a company’s overall debt. This will make it easier for companies to obtain individually structured and customised syndicated loans.

KfW’s share of the risk is at least €25 million, but no more than:

  • 25% of the company’s annual turnover for 2019 or
  • double the amount of the company’s wage costs for 2019 or
  • the company’s current financing needs for the next 12 months.

As an option, all of the banks participating in the syndicated loan can be refinanced bilaterally by KfW.

If your company wishes to obtain a loan guarantee, please contact the guarantee bank (Bürgschaftsbank) in the Land where you are based. You can find further information on guarantee banks (in German) here.

Companies that wish to access one of the loan programmes being offered in response to the coronavirus crisis can apply for a loan via their regular bank or another financing partner. Other financing partners aside from a company’s regular bank could be commercial banks, public sector savings banks (Sparkassen), cooperative banks, direct banks, building and loan associations (Bausparkassen), insurance companies or financial intermediaries. Please note: It is not possible to apply directly to KfW for a loan.

Applying for a loan: a four-step process

  1. Find a financing partner
    The company contacts its regular bank or other financing partner (or, in the case of KfW “Kredit für Wachstum” loans, a guarantee bank) and makes an appointment. If a company needs assistance in finding a financing partner, KfW’s website can provide further guidance.
  2. File an application
    Applications for loans from KfW are filed by financing partners on behalf of companies.
  3. Application review
    KfW reviews all documents and makes a decision.
  4. Conclude a loan agreement and receive liquidity
    Companies conclude loan agreements with their financing partner. After that, the funding is disbursed.