Government measures in key jurisdictions 2nd edition final pages - Flipbook - Page 42
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.
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– 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
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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.
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Establishing an economic stabilization fund for the real economy
Government measures in key jurisdictions
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