Information From 28 April 2020

1. GENERAL INFORMATION ON THE APPROPRIATE FUNDING PROGRAMME

2. MEASURES AT FEDERAL LEVEL

2.1 General information:

2.2 KfW Entrepreneur Loan

a) Information:

b) Applicants

(i) Domestic companies that are mainly privately owned and have been active on the market for at least 5 years

(ii) Domestic entrepreneurs or freelancers which have been active on the market for at least 5 years

(iii) The following will be funded

  • All companies without turnover restriction
  • Companies suffering temporary financial difficulties due to Corona Crisis, i.e. companies that were not a company in difficulty as defined by the European Union on 31 December 2019 can apply for the loan

c) Maximum loan amount: EUR 1 billion for each group of companies, limited to a maximum of

(i) 25% of annual turnover 2019 or

(ii) twice the wage costs 2019 or

(iii) current liquidity requirements for the next 18 months for small1 and medium2 sized companies and 12 months for large companies

For loans exceeding EUR 25 million, the loan amount is limited to a maximum of 50% of the company's total debt or 30% of the balance sheet total per group of companies. The higher one of both these figures is decisive for the maximum loan amount.

d) Interest rates: Interest rate is based on the development of the capital market and is fixed on the day of the commitment

e) Release from liability

(i) KfW releases the financing partner from 90% of the liability for financing small and medium sized companies.

(ii) KfW releases the financing partner from 80% of the liability for financing companies exceeding the threshold for small and medium sized companies.

f) Loan period:

(i) Loans up to EUR 800,000.00 per group of companies: maximum loan period of 10 years with up to 2 years of capital repayment grace.Loans over EUR 800,000.00 per group of companies: maximum loan period of 6 years with up to 2 years of capital repayment grace.

g) Securities: Securities customary in banking must be provided. The form and scope of the security must be agreed with the financing partner.

2.3 ERP Start-up Loan – Universal

a) Information:

b) Applicants

(i) Individuals who wish to establish a company, a freelance existence or a commercial enterprise within the first 5 years after starting the business

(ii) Individuals who take over a commercial enterprise or an active participation, even if they have been self-employed for more than 5 years

(iii) Domestic companies that are mainly privately owned, within the first 5 years after starting the business

(iv) Domestic entrepreneurs or freelancers located in Germany, within the first 5 years after starting the business

(v) The following will be funded

  • All companies without turnover restriction
  • Companies suffering temporary financial difficulties due to Corona Crisis, i.e. companies that were not a company in difficulty as defined by the European Union on 31 December 2019 can apply for the loan

c) Maximum loan amount: EUR 1 billion for each group of companies, limited to a maximum of

(i) 25% of annual turnover 2019 or

(ii) twice the wage costs 2019 or

(iii) current liquidity requirements for the next 18 months for small and medium sized companies and 12 months for large companies

For loans exceeding EUR 25 million, the loan amount is limited to a maximum of 50% of the company's total debt or 30% of the balance sheet total per group of companies. The higher one of both these figures is decisive for the maximum loan amount.

d) Interest rates: Interest rate is based on the development of the capital market and is fixed on the day of the commitment

e) Release from liability

(i) KfW releases the financing partner from 90% of the liability for financing small and medium sized companies.

(ii) KfW releases the financing partner from 80% of the liability for financing companies exceeding the threshold for small and medium sized companies.

f) Loan period:

(i) Loans up to EUR 800,000.00 per group of companies: maximum loan period of 10 years with up to 2 years of capital repayment grace.

(ii) Loans over EUR 800,000.00 per group of companies: maximum loan period of 6 years with up to 2 years of capital repayment grace.

g) Securities: Securities customary in banking must be provided. The form and scope of the security must be agreed with the financing partner.

2.4 Consortium financing

a) Information:

b) Applicants: Domestic and foreign companies that are mainly privately owned for projects in Germany.

c) Funded will be companies that meet the following requirements:

(i) As of 31 December 2019
  • It is not a company in financial difficulty as defined by EU (verification and confirmation by consortium bank)
  • The company has an orderly economic situation. The consortium bank is not aware of any unregulated payment arrears of more than 30 days, existing deferral agreements or breaches of covenants

(ii) At the time of application

  • According to the current planning (assumption: on the basis of an overall economic situation returning to normal), the company is likely to be fully financed until 31 December 2020
  • Assuming that the overall economic situation returns to normal, there is a positive forecast for the company

d) Risk share: At least EUR 25 million, limited to

(i) 25% of annual turnover 2019 or

(ii) twice the wage costs 2019 or

(iii) current liquidity requirements for the next 12 months

The risk assumption by KfW can amount to a maximum of 80% of the project financing, whereby KfW's share of the company's total debt is limited to a maximum of 50%.

e) Conditions: KfW's participation is at market conditions with a term of up to 6 years pari passu, i.e. the economic conditions are provided by the financing partner and accpeted by KfW.

2.5 KfW Express-Loan

a) Information:

b) Applicants:

(i) Commercial companies based in Germany which are majority-owned by private individuals and have been active on the market since at least 1 January 2019

(ii) Individual entrepreneurs or freelancer in Germany who have been active on the market since at least 1 January 2019

(iii) Funded will be companies that meet the following requirements:

  • Companies that have made a profit in the sum of the years 2017 to 2019 or in 2019;
  • Companies that are experiencing temporary financing difficulties as a result of the Corona crisis, i.e. companies that were not companies in difficulty as defined by the European Union on 31 December 2019, can apply for the loan;
  • Remuneration for managing directors or managing partners does not exceed a maximum amount of EUR 150,000.00 per year and per person.

c) Maximum loan amount:

(i) Maximum of EUR 500,000.00 for companies with more than 10 employees up to and including 50 employees

(ii) Maximum of EUR 800,000.00 for companies with more than 50 employees

A maximum of up to 25% of the annual turnover in 2019 can be financed per group of companies. A maximum of two applications may be submitted until the maximum credit amount is reached.

d) Interest rates: Interest rate is based on the development of the capital market and is fixed on the day of the commitment

e) Release from liability: KfW releases the financing partner from 100% of the liability.

f) Securities: Security is not required for the loan.

2.6 Bank guarantees

a) General: For companies that had sustainable business models until the corona crisis, guarantees can be made available for working capital. Up to an amount of EUR 2.5 million these are processed by the guarantee banks. Beyond that amount, the individual states or their institutes are responsible (see section 2.2)

b) Information: https://finanzierungsportal.ermoeglicher.de/

c) Extent: Guarantees can cover a maximum of 90% of the credit risk, i.e. the respective bank must assume at least 10% of its own liability.

d) Decision on the guarantee: Guarantee banks may make guarantee decisions up to an amount of EUR 250,000 independently and within 3 days.

2.7 Economic stabilization fund

In addition, the Federal Government has launched a large-volume economic stabilization fund. It consists of EUR 400 billion for state guarantees for liabilities, EUR 100 billion for direct state investments and EUR 100 billion for refinancing by KfW (https://www.bundesfinanzministerium.de/Content/DE/Pressemitteilungen/Finanzpolitik/2020/03/2020-03-23-pm-Wirtschaftsstabilisierungsfond.html;

https://dipbt.bundestag.de/doc/btd/19/181/1918109.pdf)

2.8 Corona emergency aid for micro companies and solo freelancers

a) Informationen:

b) Applicants: Domestic self-employed persons, members of the liberal professions and small enterprises including farmers with up to 10 employees

c) Requirement: Companies that were not companies in difficulties as defined by the European Union on 31 December 2019

d) Amount of the emergency aid:

(i) Up to EUR 9,000 single payment for 3 months for up to 5 employees (full time equivalents)

(ii) Up to EUR 15,000 single payment for 3 months for up to 10 employees (full time equivalents)

2.9 Aid for start-ups

The German government plans to launch a special package of measures for start-ups with a volume of EUR 2 billion. Venture capital financing is to be expanded so that despite COVID-19, there will still be enough financing rounds for promising innovative start-ups from Germany (https://www.bmwi.de/Redaktion/DE/Pressemitteilungen/2020/20200401-sart-ups-bekommen-2-milliarden-euro.html).

2.10 Export guarantees

For a limited period of time until 31 December 2020, export transactions can also be covered by official export credit guarantees of the Federal Government on short payment terms (up to 24 months) within the EU and in certain OECD countries. Details can be found under: https://www.agaportal.de/exportkreditgarantien/praxis/marktfaehige-risiken

2.11 Compensation under the Infection Protection Act (Infektionsschutzgesetz, IfSG)

Anyone who is, or has been, subject to a ban on activities or quarantine on the basis of the Infection Protection Act, may claim compensation on applications. A requirement in both cases is a decision of the public health department concerning the person.

You can find more detailed information under: https://www.berlin.de/sen/finanzen/presse/nachrichten/artikel.908216.php

3. MEASURES AT STATE LEVEL (BAVARIA)

3.1 General information: https://www.stmwi.bayern.de/coronavirus/

3.2 Guarantee by LfA Förderbank

a) Information: https://lfa.de/website/downloads/merkblaetter/produktmerkblaetter/merkblatt_buergschaft.pdf

b) Applications may be submitted by medium sized companies and members of the liberal professions

c) Maximum amount: Guarantees are provided up to an amount of EUR 30 million.

d) Extent: Guarantees can cover a maximum of 90% of the credit risk

e) Procedure: For guarantees up to EUR 500,000 the simplified application and processing procedure applies

3.3 Loan programmes by LfA Förderbank

a) Protective shield loan

(i) Informationen: https://lfa.de/website/downloads/merkblaetter/infoblaetter/infoblatt_corona-schutzschirm-kredit.pdf

(ii) Applications may be submitted by companies with an annual turnover (group turnover) of up to EUR 500 million and members of the liberal professions.

(iii) Funded will be companies that are experiencing temporary financing difficulties as a result of the Corona crisis, i.e. companies that were not a company in difficulty as defined by the European Union on 31 December 2019 can apply for a loan

(iv) Minimum loan amount: EUR 10,000.00

(v) Maximum loan amount: EUR 30 million, limited to

  • 25% of annual turnover 2019 or
  • twice the wage costs 2019 or
  • current liquidity requirements for the next 18 months for small and medium sized companies and 12 months for large companies

(vi) Release from liability: Risk assumption of 90% of the credit default risk

b) Express Loan Corona

(i) LfA is working on the introduction of an express loan corona for companies with up to 10 employees

(ii) Information: https://lfa.de/website/de/aktuelles/_informationen/Coronavirus/index.php

(iii) Planned parameters:

  • Applicants: Companies that have made a profit either in 2019 or on average over the last 3 years
  • Maximum loan amount for companies with up to 5 employees: EUR 50,000.00; maximum of 3 monthly sales in 2019
  • Maximum loan amount for companies with up to 10 employees: EUR 100,000.00; maximum of 3 monthly sales in 2019
  • Risk assumption: 100% risk assumption by the Free State of Bavaria, no risk assessment

3.4 Emergency aid Corona

a) Information: https://www.stmwi.bayern.de/soforthilfe-corona/;

https://www.verkuendung-bayern.de/baymbl/2020-156/;

b) Applications may be submitted by

(i) companies that are economically and therefore permanently active on the market,

(ii) agricultural companies, including primary agricultural production,

(iii) for their main occupation, solo self-employed persons and members of the liberal professions,

(iv) non-profit sector entities (e.g. associations) which are engaged in business activities as part of their commercial operations,

with up to 250 employees, who carry out their activities from a Bavarian place of business or a Bavarian seat of management and are registered with a German tax office.

c) Requirements: Economic difficulties resulting from Corona, i.e. companies that were not already companies in difficulty as defined by the European Union on 31 December 2019

d) Amount of the emergency aid: Between EUR 5,000 and EUR 30,000, depending on the size of the business premises

  • Up to 5 employees: EUR 5,000.00
  • Up to 10 employees: EUR 7,500.00
  • Up to 50 employees: EUR 30,000.00
  • Up to 250 employees: EUR 50,000.00

3.5 Bavarian fund

The Bavarian state government has passed a draft law on a Bavarian fund. The draft law contains the following key points (https://www.bayern.de/bericht-aus-der-kabinettssitzung-vom-31-maerz-2020/):

  1. Minimum size of funded companies: Balance sheet total or turnover greater than EUR 10 million, at least 50 employees (2 out of 3 criteria must be met).
  2. Start-ups must have been valued by private investors in a completed financing round of at least EUR 5 million including the capital raised through that round.
  3. No limit, but no funding from the Bavarian fund if the company already receives aid from the Federal Government under the economic stabilisation fund or has not received a funding measure from the Federal Government under the stabilisation fund act for reasons of state aid law.
  4. Establishment of Bayerische Finanzagentur GmbH to manage the special assets of the Bavarian fund.

4. MEASURES OF OTHER FEDERAL STATES

Information for the individual federal states:

5. MEASURES OF THE EUROPEAN UNION

The European Commission has adopted a Temporary Framework which extends the possibilities for companies to receive aid from Member States.

You can find detailed information under: https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52020XC0404(01)&qid=1586257317621&from=DE

Footnotes

1. Companies with fewer than 50 employees and an annual turnover or balance sheet not exceeding EUR 10 million.

2. Companies with fewer than 250 employees and an annual turnover not exceeding EUR 50 million or an annual balance sheet not exceeding EUR 43 million.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.