Germany’s Bundesrat today cleared the way for the Federal Government’s comprehensive support package for employees and enterprises. It also adopted the supplementary budget. Immediate assistance funds for small enterprises and own-account workers have thus been made available to the Länder. In addition, the Economic Stabilisation Fund was adopted. The Economic Stabilisation Fund is to help both large companies and start-ups that are facing difficulties in view of the coronavirus crisis to safeguard their liquidity. The conditions that need to be fulfilled to benefit from the Economic Stabilisation Fund will be specified soon in framework ordinances.
said: “Making enormous legislative efforts, the Bundestag and the Bundesrat have impressively demonstrated this week that they are capable of taking action. They have paved the way for an unprecedented support programme for enterprises and employees. This support package is to fight the crisis. It will enable us to safeguard the economic substance of our country and to get going again as well as possible after the crisis.”
The Economic Affairs Ministry is working with the Länder to finalise an administrative agreement on the rapid and unbureaucratic implementation of the Immediate Assistance Programme for small enterprises by the Länder. The immediate assistance is paid out by the Länder, for example through the promotional banks.
Oveview of assistance for enterprises
1. Immediate assistance for small enterprises
Immediate financial assistance (grants) for small enterprises with up to 10 employees is granted to all industries and to own-account workers and freelancers (full-time equivalents). The programme has a volume of up to €50 billion. More specifically, there will be
- one-off payments of up to €9,000 over a period of 3 months for businesses with a maximum of 5 employees (full-time equivalents),
- one-off payments of up to €15,000 over a period of 3 months for businesses with a maximum of 10 employees (full-time equivalents).
The grants intended are to secure the economic survival of applicants, as the immediate assistance can be used to cover costs, including rents, loans for operating expenses and leasing instalments. The one-off payments do not need to be paid back. The key elements of the immediate assistance for small enterprises and own-account workers adopted by the Cabinet can be found .
2. Additional liquidity assistance for enterprises
In addition to immediate assistance for small enterprises, there are comprehensive loan programmes for companies. KfW’s new 2020 Special Programme was launched on 23 March 2020, and the bank has accepted applications since that date. Numerous firms have already applied for loans. KfW has already received applications for loans totalling around €7.4 billion () (in German).
Small, medium-sized and large businesses can benefit from KfW’s 2020 Special Programme. The terms of the loans have once again been improved. Lower interest rates and simplified risk assessment by KfW for loans of up to €10 million are further facilitations for firms.
We are covering the maximum share of the loan risk permitted by EU legislation as KfW is assuming up to 90% of the financial risk attached to loans towards investment and operating expenses of small and medium-sized enterprises. This makes lending for banks and savings banks easier and makes bank loans more easily accessible for enterprises.
In addition to loans, enterprises can also make use of the instrument of guarantees via the guarantee banks. Guarantee banks can grant fast-track guarantees of up to €250,000 within 3 days on their own, i.e. without involving the Länder. More information can be found on the websites of the guarantee banks.
3. Economic Stabilisation Fund
Small enterprises are particularly hit by the crisis, but large companies and the real economy as a whole are also increasingly facing difficulties. For this reason, we have adopted the Economic Stabilisation Fund. The Economic Stabilisation Fund has a volume of about €600 billion, thereof
- €400 billion for state guarantees for obligations
- €100 billion for direct state holdings
- €100 billion for the refinancing of large KfW loans.
The Fund’s support measures also apply to systemically relevant small enterprises and firms in the field of critical infrastructure, and to start-ups which have been valued by private investors with a company value of at least €50 million in at least one concluded financing round since 1 January 2017, including the capital received in the course of that round.