In order to provide small and medium-sized enterprises with the support and financing they need to cope with the forthcoming challenges, the Federation and the Länder are expanding the funding available from guarantee banks and SME venture capital companies.
“Increasing and improving the guarantees and the venture capital serves to boost the support available for transition projects which will require larger amounts of finance than in the past. Also, demand for capital to fund business successions, which are so important for structural change, has been growing for years. These are therefore very important measures,” explained , Parliamentary State Secretary at the Federal Ministry for Economic Affairs and Climate Action and Federal Government Commissioner for SMEs.
Guarantees of up to €2 million possible
.From 1 January 2023, guarantee banks will be able to provide guarantees of up to €2 million for borrowers and lessees. Previously, the cap had been set at €1.25 million. In parallel to this, the SME venture capital companies will then generally be able to provide up to €1.5 million in venture capital rather than the previous limit of €1 million. In addition to the clear rise in the ceilings on guarantees and venture capital, various improvements have been adopted which result in more efficiency and quicker decisions.
By improving the back-to-back guarantee declarations, the Federation and the Länder are working with the guarantee banks to help SMEs cope with current challenges and are fostering the transformation of the economy.
Background to the back-to-back guarantee declarations by the Federation and the Länder
The guarantee instrument has been making an important contribution to the establishment of a strong SME sector in Germany since the early 1950s. The general conditions of the relevant contracts between the Federation, Länder and guarantee banks are revised every five years. The back-to-back guarantee declarations for the forthcoming funding period from 1 January 2023 until 31 December 2027 provide a good basis on which to provide the best possible support for the German Mittelstand and its employees.