Corona aids: KfW and federal states’ business development bank subsidies

Created by Heinrich Thiele |

In Germany, the government addresses the coronavirus’ economic effects in particular with loans and the assumption of risks by the business development banks. The KfW has the most important function in connection herewith but also the federal states’ business development banks (Landesförderinstitute) have started to provide assistance.

Existing funding instruments have already been expanded, supplemented by risk assumptions and now often also extend to working capital financing. This is supposed to secure the companies’ liquidity. After consultation with the EU, the federal government has additionally launched a new special program. Such program’s main purpose is the KfW’s participation in syndicated financing. 

Applications for funding are subject to financing difficulties due to the crisis caused by the Coronavirus. However, subsidies are granted only if the following conditions have been met: 

  • the applying company had no difficulties as of December 31, 2019 (was in an orderly financial condition)
  • as of the application date, the company, according to current planning (assumption: based on an overall economic situation returning to normal ("as before the crisis")), the company is likely to be fully financed until December 31, 2020
  • assuming that the overall economic situation is going to return to normal ("as before the crisis"), there is a positive going concern forecast for the company.

An evaluation of these provisions requires a systematic presentation and in particular professional financial planning. 

When applying for subsidies, one must demonstrate the existing demand’s eligibility and take into account possible combinations of KfW funds and the federal states’ business development bank funds.

Please contact me or my colleagues Mario Hesse, Heiner Stemmer, Jens Weber, Dr Adrian Bölingen or Markus Niebel should you have questions in connection with the relevant KfW programs and the federal states’ business development bank subsidies as well as any content required for an application. 

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