Coronavirus - Government measures in key jurisdictions - Flipbook - Page 38
Germany
Contributor: Heuking Kühn Lüer Wojtek
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Loans and
financial
support
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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,
start-ups, 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
3 monthly turnovers, with max. EUR 800,000 for companies with more than 50
employees, and max. EUR 500,000 for companies with up to 50 employees.
Has the
government put
in place any new
bank funding
schemes?
– The “KfW Special Programme” – this scheme is designed for medium-sized
enterprises and large companies. 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. 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.
– 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.
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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.
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In addition to the programs of the federal government, each federal state has put
in place accompanying programs to support regional businesses.
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Liquidity support through “unlimited” loan guarantees
Employment
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What financial
support is the
government
providing to
businesses and
to individuals
on employment
issues?
Employers may choose to temporarily reduce the working time of their employees
if the company is affected by the corona crisis (e.g. if a company is closed down
or if there are difficulties in the company due to missing orders or supplies). The
remuneration of the employees will be reduced correspondingly. This measure shall
avoid layoffs and enable companies to keep qualified workers during the crisis.
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Affected employees can receive so-called “short-time working allowance”. This
benefit must be applied for by the employer. If granted, the government will
generally refund 60% (employees without children) or 67% (employees with
children) of the difference between the regular net income and the reduced net
income. The German government has introduced legislation to increase the shorttime working allowance to 70% or 77% starting from the fourth month and to 80%
or 87% starting from the eight month.
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Coronavirus: FAQ Employment Law Part 2
Government measures in key jurisdictions
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