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COVID-19 EU PolicyWatch

Database of national-level responses

Eurofound's COVID-19 EU PolicyWatch collates information on the responses of government and social partners to the crisis, as well as gathering examples of company practices aimed at mitigating the social and economic impacts.

Factsheet for case DE-2020-13/352 Updated – measures in Germany

KFW entrepreneur loan

KfW Unternehmerkredit

Country Germany , applies nationwide
Time period Temporary, 23 March 2020 – 31 December 2021
Type Legislations or other statutory regulations
Category Supporting businesses to stay afloat
– Access to finance
Author Sandra Vogel (IW)
Case created 07 April 2020 (updated 05 May 2021)

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 a maximum of 10 years and the related interest rates were 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.

Updates

The following updates to this measure have been made after it came into effect.

01 November 2021

At the beginning of November 2020, the KfW special programmes' running time was prolonged until 30 June 2021.

25 March 2021

All KfW programmes providing loans to companies negatively affected by the lockdowns imposed during the COVID-19 pandemic were prolonged until the end of 2021.The KfW also stated that it had spent around 49 billion EUR in all its programmes related to the COVID-19 pandemic in 2020

15 March 2021

At the beginning of February 2021, the KfW reported to have granted a total of €28.3 billion in 2020 for this programme (as part of its credit portfolio to help stabilise the economy during the COVID-19 pandemic).

07 October 2020

In a more recent press release, the KfW updated its previous numbers. As of 11 August 2020, the KfW received 81,359 loan applications. 99.8% of these applications were not higher than €3 million. Overall, 99.7% of all applications have been processed. The KfW has granted a total sum of €42.6 billion.

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. In another press release from 6 November 2020, the bank stated to have received 95,000 applications for all its additional COVID-19 related programmes. 99% of the application had been finalised by the bank. Around 97% of the applicants were small and medium-sized companies. Granted sums amounted to a volume of nearly €46 billion.

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 support 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)
  • 06 November 2020: KfW special programmes prologned (www.kfw.de)
  • 19 November 2020: State aid Germany (ec.europa.eu)
  • 02 February 2021: KfW press release from 2 February 2021 (www.kfw.de)
  • 25 March 2021: KfW press release 25 March 2021 (www.kfw.de)

Citation

Eurofound (2020), KFW entrepreneur loan, case DE-2020-13/352 (measures in Germany), COVID-19 EU PolicyWatch, Dublin, http://eurofound.link/covid19eupolicywatch

Disclaimer: This information has not been subject to the full Eurofound evaluation, editorial and publication process. All information is preliminary and subject to change.