Joint Press Release: German Federal Government decides to introduce KfW instant loans for medium-sized enterprises

The German Federal Government has put together a further extensive protection package for medium-sized enterprises in light of the challenges of the corona crisis. Based on the adjusted Temporary Framework published by the European Commission on 3 April 2020, the German Federal Government is introducing extensive KfW instant loans for medium-sized enterprises (SMEs).

Federal Minister for Economic Affairs and Energy Peter Altmaier: “Medium-sized enterprises make up the backbone of our economy and are particularly affected by this crisis. This is why it is critical that we retain this unique substance and breadth so that we can hit the ground running after the crisis. 99.5 per cent of all companies in Germany are medium-sized enterprises. They generate 35 per cent of overall turnover, provide close to 60 per cent of all jobs and over 80 per cent of all trainee positions. Therefore we are putting an additional extensive protection package in place for our mid-sized sector. We will introduce a KfW instant loan for which the state will assume 100 per cent of the credit risk. The terms of the loans are being extended to 10 years.”

Federal Minister of Finance Olaf Scholz: “There is no blueprint for this pandemic. As the Federal Government, we need to take strong decisive action and constantly monitor the situation closely. The KfW instant loan is a further programme, which we are introducing in addition to already existing offers. It is directed at small and medium-sized enterprises that need support very quickly and at different conditions than with our other aid packages, which of course continue to be available.”

KfW Chief Executive Officer Dr Günther Bräunig: “The 100 per cent liability waiver and abstention from usual risk assessment ensure that those companies experiencing difficulties solely due to the corona pandemic will receive a loan quickly. We are expecting a large number of applications and will work together with the banks and savings banks to do everything we can to create the technical prerequisites for fast disbursement.”

At their core, KfW instant loans for medium-sized enterprises include the following measures:

Provided that a medium-sized enterprise showed profits in 2019 or on average over the last three years, an instant loan with the following basic points shall be granted:

• The instant loan is available to medium-sized enterprises with more than ten employees that have been active on the market since at least 1 January 2019.
• The credit volume per company is up to 3 monthly turnovers, with a maximum of EUR 800,000 euros for companies with more than 50 employees, and a maximum of EUR 500,000 euros for companies with staffs of up to 50 people.
• The company is not allowed to have experienced financial difficulties before 31 December 2019 and is required to demonstrate that its financial condition was in order at that point in time.
• A current interest rate of 3 per cent with a term of ten years.
• The bank is released from 100 per cent liability by KfW, hedged by a guarantee from the German Federal Government.
• The credit approval process does not involve additional credit risk assessment by the bank or KfW. This enables loans to be granted quickly.

The KfW instant loan can start upon approval by the European Commission.