KfW Loans for Start-ups

Emergency Loans

The Federal Government is expanding KfW’s existing programmes in the context of liquidity support. In addition to the ERP Start-up Loan („Gründerkredit“) and the KfW Entrepreneur Loan („Unternehmerkredit“), for which KfW bears up to 90 percent of the risk, the Federal Government has approved the KfW Emergency Loan. The KfW Emergency Loan is characterised by the fact that KfW or the Federal Government provide 100 per cent of the loan amount as security. The KfW Emergency Loan is aimed at enterprises with 11-249 employees and has a maximum amount of EUR 500 thousand (up to 50 employees) or EUR 800 thousand (50 employees and more). Currently, start-ups have to meet several requirements for this loan. Among other things, the financial difficulties shall not have existed before 31 December 2019 and the start-ups must already have made a profit, either in 2019 or on average over the last 3 years. The loans will continue to be handled by the respective house banks of the companies, which do not provide for any risk assessments due to the state guarantee.

With the coverage of over 100 percent, the Federal Government has responded to an important demand from the start-up sector. However, the minimum requirements for start-ups (e.g. minimum size and profit making) exclude early stage start-ups. The industry considers it possible that the rules will be relaxed even further and that smaller start-ups will also be able to benefit from this emergency aid in the future.

“Matching Fund” for Startups

2 Billion EUR Package

In so-called co-investment through public funds in conjunction with private investors, a new or existing investor decides to provide fresh funds to a start-up. It is important that the investment serves to help the start-up in an emergency situation caused by the Corona crisis and that a positive continuation forecast for the time after the crisis is given. The private investors’ contributions can then be matched with public funds, for example through KfW Capital. In the course of this measure, the matching partners acquire a fiduciary interest in the start-up through the investors.

Many details of the measure are currently still being negotiated. It is unclear, for example, to what extent the matching ratio of the funds is possible. According to European law, a ratio of 70:30 is possible, but the European Investment Funds has so far relied on a ratio of 50:50. It is expected that the application for matching will be made through the investors. Details of the structure and a time frame for the measures are expected soon. The start-up industry hopes that the matching funds will be a measure that will benefit the broad mass of start-ups.

Non-Refundable

Emergency Aid

Startups with max. 10 employees, freelancers and self-employed receive up to 15k EUR to support their fix costs when strongly affected by the COVID-19 crisis.

Apply for “Soforthilfe” at your local Bundesland authority (see here for Berlin).

Kurzarbeitergeld

Short-Time Work

The Federal Employment Agency grants, under certain conditions, short-time work benefits (KUG) for companies suffering from loss of work in the course of the Corona crisis.

The employer pays the pro-rata wage on the hours actually worked and the Federal Employment Agency tops up the wage with 60 percent (67 percent for employees with children) of the lost flat-rate net wage. The period of payment is limited to a maximum of 12 months.

Deferral of Payments

Social Insurance

Deferral of Payments

Tax Payments

• No enforcement measures

• No fines for delayed payment

• Adjustment of prepayments