In light of the challenges posed by the coronavirus crisis, the German government is launching an additional extensive programme to its protective shield for small and medium-sized businesses. Based on the modified Temporary Framework for state aid measures published on 3 April 2020 by the European Commission, the German government is now introducing a comprehensive Quick Loan Programme (KfW-Schnellkredit) for small and medium-sized businesses. The programme will be run by the government-owned promotional bank KfW.
: “Small and medium-sized companies form the backbone of our economy, and they are especially hard-hit by the current crisis. That’s why it’s essential for us to safeguard this unique, broad-based cornerstone of our economy in order to ensure that we can re-start our engines at full power when the crisis is over. Small and medium-sized businesses make up 99.5% of Germany’s firms. They generate roughly 35% of our total revenue, employ nearly 60% of our workers, and provide over 80% of our apprenticeships. For this reason, we are adding another comprehensive programme to our protective shield for SMEs. We are introducing the KfW Quick Loan Programme, which will offer loans with terms of 10 years, and the government will cover 100% of the risk.”
Finance Minister Olaf Scholz: “There is no blueprint for responding to this pandemic. We in the German government must act decisively and vigorously, while at the same time keeping a constant close eye on developments. We are now launching a new KfW Quick Loan Programme in addition to the other assistance programmes that we have adopted. The new programme targets small and medium-sized firms that need very, very rapid support, and its conditions are different from those in the other assistance programmes, which of course will continue to operate as well.”
KfW Chief Executive Officer Günther Bräunig: “These loans will provide liability waivers of 100%. In addition, the usual risk assessments will be waived. In this way, we are making sure that businesses which have run into financial difficulty solely due to the pandemic can access credit swiftly. We expect to receive a very large number of applications. Together with banks, we will do our utmost to put the technical details in place that will enable the rapid disbursement of loans.”
The basics of the KfW Quick Loan Programme:
Small and medium-sized firms that recorded a profit in 2019 (or on average over the past three years) will be eligible for an “instant loan” with the following features and conditions:
- Quick loans are available to small and medium-sized businesses that have over 10 employees and that have been active on the market since at least 1 January 2019.
- Each eligible business can obtain a loan equalling up to three months’ revenue from 2019, with a maximum amount of €800,000 for firms with over 50 employees and €500,000 for firms with up to 50 employees.
- Companies must not have been in financial difficulty as of 31 December 2019 and must have been financially stable at that time.
- Loans will provided at 3% interest for terms of 10 years.
- KfW will provide banks with 100% liability waivers that are backed up by government guarantees.
- Loans will be approved without further risk assessment by banks or by KfW. This will ensure the quick approval of loans.
The KfW Quick Loan Programme will get started as soon as it is approved by the European Commission.