Background information

The goal of this measure is to provide financial support to companies for investments and working capital. Improved conditions for receiving loans are based on the European Unions "Temporary Framework for State aid measures to support the economy in the current COVID-19 outbreak“. This measure is part of a broader rescue package for the German economy adpoted by the Federal Government at the end of March 2020. The package also includes changes in tax law, all of them directed at easing tax burdens for companies and also includes easier acces to loans, start-up support or financial help for solo- or micro entrepreneurs, eased up rules for short-time work and eased up rules regards insolvency proceedings.

Content of measure

The companies in need of financial assistance due to the negative impact of the COVID-19 outbreak can apply for loans worth up up to €1 billion. However, the loan sum is limited to one of the following critieria:

1. maximum of 25% of the annual turnover in 2019;
2. double the wage costs in 2019;
3. 50% of the company’s total debt if the loan exceeds €25 million.

The loans must be paid back within five years and the related interest rates reduced (between 1 and 2.12% annually). To improve companies‘ chances to receive such a loan, the KfW bank (the German Credit Institute for Reconstruction) takes over the risks borne by the company’s house bank (80% of the risks for large companies and even 90% of the risks for SMEs). Companies that have been in the market for at least three, but not five years, or companies that can provide two financial statements can also apply for loans granting the same conditions. However, in this case, companies need to apply for the ERP Start Up Loan - Universal.

Use of measure

No information to date on this particular measure. However, the KfW issued a press release with the overall usage of the COVID-19 related measures administered by the bank. According to the press release, the KfW received over 70,000 loan applications (worth €50 billion) since 23 March 2020. 98.5% of these application were not higher than €3 million.

Target groups

Workers	Businesses	Citizens
Does not apply to workers	SMEs Larger corporations	Does not apply to citizens

Actors and funding

Actors	Funding
National government Company / Companies	National funds

Social partners

Social partners' role in designing the measure and form of involvement:

	Trade unions	Employers' organisations
Role	Consulted	Consulted
Form	Direct consultation outside a formal body	Direct consultation outside a formal body

Social partners' role in the implementation, monitoring and assessment phase:

• Unknown
• Main level of involvement: Peak or cross-sectoral level

Involvement

German social partners are usually consulted by the Federal Government on broader measures, though no formal tripartite social dialogue structure exsits in Germany at the federal level.

Views and reactions

The Confederation of German Employers' Association (BDA) and the German Trade Union Confederation (DGB) jointly welcomed the crisis package adopted by the Federal Government in spring 2020. Social partners highlighted in the press release to be in suuport of the KfW administered measures targeting companies.

Sources

• 13 March 2020: DGB and BDA: The social partners share responsibility in the corona crisis over differencesSocial partners neglect differences (DGB und BDA: Die Sozialpartner stellen gemeinsame Verantwortung in der Coronakrise über Differenzen) (www.dgb.de)
• 07 April 2020: KfW coronavirus aid: loans for companie (www.kfw.de)
• 30 June 2020: 100 days of KfW Corona aid: tens of thousands of companies benefit from federal support in the fight against the consequences of the pandemic (100 Tage KfW-Corona-Hilfe: Zehntausende Unternehmen profitieren von Unterstützung des Bundes im Kampf gegen Folgen der Pandemie) (www.kfw.de)
• 11 August 2020: First half 2O20: KfW grants double (www.kfw.de)