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. For example, the bridging aid to provide financial aid to small and medium-sized enterprises and the German government's economic stimulus package of EUR 130 billion have now been approved.
Financial aids 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 %)
- Bridging aids to support small and medium-sized enterprises with up to €50,000 per month maximum over 3 months (generally max. amount EUR 150,000)
- Extensive economic stimulus package with a volume of €130 billion, which i.a. includes reduction of VAT, child bonus for families, strengthening of local communities (Kommunen), relief for electricity cost and incentives for research into future technologies
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. Bavaria, Saxony), 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). (Further information on the ESF can be found here)
. The European Commission ("Commission") approved the ESF on 8 July 2020 (further information on the approval of the ESF can be found here). Support measures from the WSF can already be applied for via PwC here
In order to support Start-ups and young growth companies during the corona crisis, the German federal government announced a EUR 2 billion assistance package for Start-ups (“Assistance Package”). The 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 eligibility requirements for the use of the CMF (pillar 1) were finalized mid-May and the application process has since launched. Since 8 June 2020, KfW Banking Group is making global loans with exemptions from liability available to the regional state aid banks to finance Start-ups without access to pillar 1 and small SMEs. These funds enable the regional state aid banks to refinance promotional programmes tailored to the needs of the individual federal states. Depending on the respective programme, this can be mezzanine or equity financing (further information on the state support for start-ups can be found (further information on the state support for start-ups can found here).
The financial aid is coordinated with the “Temporary_Framework” for state aid measures adopted by the Commission on 19 March 2020 (first amendment adopted on 3 April 2020, second amendment adopted on 8 May 2020, third amendment adopted on 29 June 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.
Further, the EU Heads of State and Government agreed on a comprehensive recovery programme called Next Generation EU totalling €750 billion for Europe's economic recovery after the Corona crisis on 21 July 2020. According to this programme, €390 billion is to be provided as non-repayable grants and €360 billion as loans to EU member states. The loans and grants are intended to revitalise and strengthen the European single market, ensure a level playing field and support much-needed investment for environmental and digital change. Information on the national legal structure and framework within which the loans and grants under the aid package will be disbursed 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