Our immediate guidance

In the current climate, we would advise businesses to consider the below key aspects:

Short term funding requirements

Please refer to your existing lender(s) to clarify the required documents for the loan application. In case of urgent liquidity needs, we would recommend you have the following documents to hand when filing a loan application for the KfW programme:

  • Last two annual financial reports – including liability schedule and income surplus calculation
  • Business evaluation (BWA) 2019, provided that the 2019 annual financial statement is not yet available
  • 24-month liquidity plan from which the liquidity / financing requirement emerges
  • Business plan (two years +) incl. current order book
  • Description that the liquidity needs arose due to the COVID-19 crisis
  • Description of the impact of the COVID-19 pandemic on your business (under the assumption that after May 2020 the business will start to rebound) and your future expectations
  • Action plan to overcome the crisis

Act quickly

Lenders are already receiving a large number of requests. This is likely to lead to delays in process applications. Plan and prepare, but move quickly.

KfW instant loans

Based on the adjusted Temporary Framework published by the European Commission on 3 April 2020, the German Federal Government has now decided to introduce instant loans for SMEs, for which the state will assume 100% of the credit risk. To be eligible for the KfW instant loan, SMEs must recorded profits in 2019 (or on average over the last three years) and have more than ten employees. The respective business should have also been active on the market at least since 1 January 2019.

  1. The maximum credit volume per company is limited to three month’s revenue from 2019, with a maximum of EUR 800,000 for companies with more than 50 employees, and a maximum of EUR 500,000 euros for companies with up to 50 employees
  2. The company must have been in good financial condition, and not experienced financial difficulties before 31 December 2019
  3. The interest rate will be 3% with a term of 10 years
  4. The instant loans are fully backed by the KfW, which is hedged by a guarantee from the German Federal Government
  5. Faster credit approval process: Provision of loans will be without any additional credit risk assessment by the bank or KfW

KfW Special Programme 2020

DC Advisory breaks down what the KfW Special Programme is and what it could mean for your business.

In line with the German government’s package of measures to mitigate the economic impact of the coronavirus, KfW has been mandated by the German government to provide liquidity aid for businesses in Germany through additional loan facilities, the so-called KfW Special Programme 2020.

  1. Since Monday 23 March 2020, you can submit loan applications via commercial banks or other financing partners to apply for the KfW programme
  2. KfW has improved the access conditions and terms of its existing support instruments for you:
    • KfW increases the risk assumption up to 90% for working capital and capex loans for SMEs and up to 80% for large companies
    • Improved interest rate conditions between 1 % – 1.46 % p.a. for SME and 2 % – 2.12 % p.a. for large companies
  3. In addition, KfW will participate in syndicated structures with a risk assumption up to 80%
  4. KfW is automatically approving loan applications up to EUR 3 million after the risk assessment of your lender
  5. To see if your company is eligible for the KfW Special Programme 2020, please visit the website of KfW for further information

Due to the large number of requests lenders already receive, to apply for a KfW Special Programme 2020 facility, we would advise you approach your existing lender(s) as soon as possible.

Other German government support measures

The German government’s funding response to Covid-19 is rapidly changing and our aim is to summarise the information and help in any way we can.

Therefore, below are some links that may prove helpful:

  • You can find live updates from the Federal Government of Germany on COVID-19 here or by subscribing here to receive general live email updates and press releases
  • The Federal Government of Germany has announced an extensive package of measures to protect jobs and to protect businesses of all sizes in all sectors, available here:
    1. Pillar: More flexible reduced hours compensation benefit
    2. Pillar: Deferring tax payments and reducing prepayments will be enhanced
    3. Pillar: A comprehensive finance funding package worth billions for businesses
      • Existing KfW liquidity assistance programmes will be expanded with improved access conditions and terms. Additional special KfW programmes will also be launched
      • To accelerate liquidity provision, the Federation also gives guarantee banks (Bürgschaftsbanken) the freedom to make guarantee decisions up to EUR 250,000 independently and within a period of three days
    4. Pillar: Strengthening European Cohesion
  • Guidance to employers and businesses about reduced hours compensation please visit the website of your local job centre. Further information to the tax-related liquidity assistance, please refer to your local tax office
  • The Federal Government of Germany has announced a EUR 50 billion comprehensive financing  emergency aid for small businesses with up to ten employees, available here >