Aid from the German federal and state governments at a glance
In order to mitigate the economic impact of the Covid-19 pandemic on businesses, numerous financial aid measures have been set up at federal and state level and most of them have now been implemented. They include in particular:
KfW Special Programme 2020 ("KfW-Sonderprogramm 2020")
- KfW Entrepreneur Loan to secure house bank loans (risk assumption up to 80% risk, SMEs 90%)
- ERP Start-Up Loan to secure house bank loans (risk assumption up to 80% risk, SMEs 90%)
- Direct participation for syndicated loans (“Direktbeteiligung für Konsortialfinanzierung (855)”) with KfW as syndicate partner (risk assumption up to 80%, 50% of overall indebtedness)
- KfW Express Loan 2020 (“KfW-Schnellkredit 2020”) to secure house bank loans (risk assumption of up to 100% risk, max. €800,000)
Guarantee Programmes ("Bürgschaftsprogramme")
- Guarantees of the guarantee banks at state level to secure house bank loans by guarantee banks (risk assumption of up to 90% risk and €2.5 million guarantee limit)
- Large State Guarantee Programme (“Großbürgschaftsprogramm”) at federal and state level, to secure loans to commercial enterprises with a viable concept (risk assumption up to 90 %)
Immediate Coronavirus Aid ("Corona-Soforthilfe")
- Federal Immediate Coronavirus Aid for small enterprises, self-employed individuals, and farmers by way of liquidity grants (up to €15,000 in individual cases, total volume up to €50 billion)
- Immediate Coronavirus Aid at state level for small companies (in some cases also companies up to 250, e.g. in Bavaria), self-employed individuals and farmers (in individual cases up to €60,000)
Protective shield for supplier loans (“Schutzschirm für Lieferantenkredite”)
- The Federal Government is setting up a protective shield of up to €30 billion to secure supplier loans by a guarantee for German companies
Stabilisation fund at individual state level
- In various states (e.g. Baden-Württemberg, Bavaria, Bremen), funds have been planned to avert the economic damage that has occurred and is still expected due to the Covid-19 pandemic
- For example, the establishment of the BayernFonds serves to stabilise companies in Bavaria through the assumption of guarantees and recapitalisation measures
In addition, the Federal Parliament (“Bundestag
”), with the approval of the Federal Council (“Bundesrat
”), established an Economic Stability Fund
(“ESF”). The ESF will be able to provide guarantees, loans and recapitalisation measures (i.e. equity investments). (See: Law on the establishment of an economic stabilisation fund)
In a joint press release on 1 April 2020, the Federal Ministry of Economics and the Federal Ministry of Finance announced the implementation of a €2 billion package of rescue measures specially tailored to the needs of start-up companies. The €2 billion assistance package has two pillars. Pillar 1 is the coronavirus matching facility (“CMF”) and pillar 2 has been created for start-ups and small companies. The existing collaborations with the fund of funds (KfW Capital and the European Investment Fund) will provide the start-ups with additional public funding via the CMF. Alternative ways to secure funding will be opened up to start-ups and small companies with no access to the CMF. To do so, there will be close collaboration with the federal states via the regional development banks. The first payments from the CMF based on pillar 1 are expected in May. Payments based on pillar 2 are expected to be made in June (further information can be found here).
The financial aid is coordinated with the “Temporary_Framework” for state aid measures adopted by the European Commission ("Commission") on 19 March 2020 (first amendment adopted on 3 April 2020, second amendment adopted on 8 May 2020). All national financial aid programmes falling within the scope of the Temporary Framework must comply with the conditions of this Framework if individual approvals by the Commission and corresponding delays are to be avoided (further information can be found here). The Commission already approved most of the federal government’'s financial aid measures in March 2020.
As the ESF still has to be approved by the Commission, it is not operational yet. However, on 8 May 2020, the Commission defined the scope for public recapitalisation schemes and individual recapitalisation measures for non-financial companies (further information can be found here). Therefore, the approval of the ESF and related implementing regulations by the Commission can be expected shortly.
Please click here for a more detailed overview.
Any questions? Please contact: Dr Martin Kleinschmitt, Dr Dorothee Prosteder, Dr Bärbel Sachs, Dr Nikolai Warneke
Practice groups: Banking & Finance, Antitrust, Restructuring & Insolvency