We are continuing our assistance for start-ups and small enterprises – €2 billion package of measures extended

© iStock/Xavier Arnau

The Federal Ministry for Economic Affairs and Energy and the Federal Ministry of Finance have instructed KfW to extend its €2 billion package of measures for start-ups and small enterprises until 30 June 2021. Up until now, the funds from the package, which aims to mitigate the impact of the Covid-19 pandemic, could only be used for financing granted by 31 December 2020. Thanks to the extension, young companies now have six more months to receive venture capital and equity-style financing from the package of measures.

Dr Ulrich Nußbaum, State Secretary at the Federal Ministry for Economic Affairs and Energy said: “We want companies to really get going again after the crisis. This is why this spring we made available €2 billion in funding for start-ups and small enterprises, thus responding to these companies’ financing needs in a targeted manner. Start-ups are making very good use of the package. This is why we have extended it: companies can now access the funds from the €2 billion package up until 30 June 2021.”

Dr Jörg Kukies, State Secretary at the Ministry of Finance said: “Our rescue package will be extended. Start-ups and small enterprises are bearing the brunt of the continuing pandemic-related restrictions on economic and social life. The decision to extend our assistance until 30 June 2021 is a good investment in the innovative potential and viability of the German economy.”

KfW board member Dr Ingrid Hengster said: “The number of technology and fast-growing start-ups in Germany has grown considerably in the last few years, which is a very positive development. Young companies are of particular value to our economy as they hold great modernisation and employment potential and provide much-needed impetus for progress. KfW and KfW Capital are making sure that the funds provided by the Federal Government are used in a way that helps young companies make it through this crisis unscathed.”

The €2 billion package of measures for start-ups and small enterprises has been available since May 2020 and is based on two pillars. Under pillar 1, the existing cooperation between KfW Capital on behalf of the Federal Government and the European Investment Fund (EIF) is expanded in order to provide funding from the package to venture capital funds so they can invest in start-ups (Corona Matching Facility). Venture capital funds such as the High-tech Start-up Fund (HTGF) and coparion can apply for liquidity assistance for start-ups, and additional funding is available under the ERP Start-Up Fund financing programme.

Pillar 2 is open for start-ups and small enterprises which cannot access public funding through a VC fund under pillar 1. Here, the funding from the €2 billion package of measures is disbursed by the Länder funding institutes – either directly or via intermediaries such as family offices, business angels and SME-focused private equity investment organisations. Only companies with an annual turnover of €75 million or less are eligible for funding under pillar 2. The funds, for which the Federal Government carries the risk, are provided to the Länder funding institutes via the KfW as guaranteed ‘global loans’. The public share of the financing can amount to up to €800,000 per company in line with the 2020 Federal Framework ‘Small amounts of compatible aid’.

Under pillar 2, venture capital fund managers have up until now submitted applications worth around €860 million in funding and are planning to provide funding to around 350 start-ups. Under pillar 2, KfW has concluded global loan agreements worth around €556 million with the Länder funding institutes of Baden-Württemberg, Bavaria, Berlin, Brandenburg, Bremen, Hamburg, Lower Saxony, North Rhine-Westphalia, Rhineland-Palatinate, Saxony, Saxony-Anhalt, Schleswig-Holstein and Thuringia. Companies from Mecklenburg-Western Pomerania can access financing via the funding institute of Thuringia. The agreements with the Länder funding institutes of Hesse and the Saarland will be signed shortly. As part of the extension of the package of measures and in light of the strong demand received, several of the Länder funding institutes are planning to top up their global loans with KfW.