Joint Press Release: KfW instant loan for the SME sector starts immediately

A further important component of the German Federal Government’s extensive protection package for mid-sized companies is launching immediately in the form of the “KfW Instant Loan”. After the resolution to set up the programme was passed on 6 April and the European Commission issued its approval under state aid rules on 11 April, KfW and the on-lending banks very quickly took the steps needed to implement the KfW Instant Loan.

Federal Minister for Economic Affairs and Energy Peter Altmaier: “We are now using the KfW Instant Loan to quickly provide our many mid-sized companies with the liquidity they so urgently need. By assuming 100% of the credit risk and with a loan term of ten years, we are providing unbureaucratic and reliable help. We have to make every necessary effort to support our SME sector so our economy will be able to hit the ground running after the crisis. Mid-sized companies make up 99.5% of all companies in Germany, account for 60% of all jobs and 80% of all trainee positions.”

Federal Minister of Finance Olaf Scholz: “The Federal Government is doing everything to help our country make it through the corona crisis successfully. By providing an unprecedented aid package, we ensure that small, medium-sized and even large companies will be able to bridge these difficult times and be ready to take off afterwards. It is also critical that the aid arrives very quickly. This is precisely what the KfW Instant Loan ensures. Applications can be submitted starting tomorrow (Wednesday). The Federal Government is covering 100% of these instant loans; The customers’ banks do not bear any risk. This ensures that the money arrives quickly where it is most urgently needed.”

KfW Chief Executive Officer Dr Günther Bräunig: “The KfW Instant Loan is the implementation of a further important measure within the framework of coronavirus aid which is particularly tailored to companies and operations with ten employees or more. Because applications are submitted through the customers’ banks without any further risk assessment, aid can quickly reach companies, thus helping to mitigate the severe effects of the corona pandemic.”

In essence, KfW instant loans comprise the following measures for the SME sector:

Provided that the company showed a profit on average from 2017–2019, or in 2019 if it has only existed on the market for a shorter period of time, an “instant loan” at the following basic conditions will be granted:

• The 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 25% of total 2019 turnover, with a maximum of EUR 800,000 for companies with more than 50 employees, and a maximum of EUR 500,000 for companies with staff 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.
• Upon request, there is a grace period of up to two years from the start in order to reduce the short-term strain.
• The bank is released from 100% liability by KfW, hedged by a guarantee from the Federal Government.
• The credit approval process does not involve additional credit risk assessment by the bank or KfW. Collateral security is not planned. This enables loans to be granted quickly.

Furthermore, improvements have been made to the already-existing KfW special programme. These consist of an extension of the term from up to five to up to six years, and even for up to ten years for loans of up to EUR 800,000. In addition, the fact that the company’s financial condition was in order as of 31 December 2019 is used as basis for a positive business continuation forecast.