Lots of business companies are nowadays facing liquidity shortages due to COVID-19 constraints imposed by the German government. KfW (Kreditanstalt für Wiederaufbau) therefore has launched numerous financial special programmes to enable companies struggling to be solvent in Corona crisis. One of these programmes is the KfW Schnellkredit.

The following will clarify whether your company is eligible for the KfW Schnellkredit programme, on what terms and conditions you might apply for it.

The KfW Loans for Solvent Businesses

Relationship banks mostly take more default risks to an extent that is limited by their own risk-bearing capacity in granting loans. Consequently, there has been a funding gap as a major obstacle for banks to grant a loan. The German Government covers this gap by state guarantees. So the KfW Schnellkredit is covered by 100% state liability instead of previous 90%.  

However, governmental aid programmes are not limitless and obtaining the KfW Schnellkredit depends on a number of conditions. Provided that these are maintained, companies then can apply for this programme.

Notwithstanding the full liability release, all banks accepting loan applications for the KfW-Schnellkredit must verify and confirm to KfW that the terms and conditions of a loan are met by companies appropriately.

Those companies, who have already been in economic difficulty before the coronavirus crisis, will not be able to benefit from this loan facilitation.

Eligible applicants are: 

• a company with workforce of more than 10 employees;
• who reports a profit of irrelevant amount in 2019 or reports a profit on average over the last three years; 
• who has been operating since January 1 and
• who has not been experiencing financial difficulty as of December 31, 2019 according to the EU definition of businesses in economic difficulty (see explanation below)

Eligible credit volume per an applicant:

• Max. loan amount up to 25 % of the annual turnover 2019 per a business group
• Maximum 675,000.00 euros per a business group with workforce of up to 10 and more employees
• Maximum 1,125,000.00 euros per business group with workforce of more than 10 and up to 50 employees
• Maximum 1,800,000.00 euros per business group with workforce of more than 50 employees at the applicant company.

Eligible investments:

• Acquisitions such as machinery and equipment (investments)
• All running costs such as rental fees, salaries or stock of goods (working capital)

Loan terms/application:

• Interest rate 3.0% (fix)
• Two years redemption free
• Term of 10 years

The application should be submitted via the relationship bank. There is no further credit risk assessment by the relationship bank or by KfW. The relationship bank only checks whether the formal requirements for the loan programme are met by an applicant.

EU definition of ‘company in an economic difficulty’

• Stock companies or independent limited companies (e.g. AG, GmbH), except for small enterprises younger than three years, if more than half of the subscribed capital has been lost as a result of accumulated losses as of December 31, 2019.
• Unlimited liability companies (e.g. OHG, KG), except for small enterprises younger than 3 years, if more than half of their capital as shown in the balance sheet has been lost as a result of accumulated losses as of December 31, 2019.
• A company is a subject to insolvency proceedings or fulfils the criteria for opening insolvency proceedings.
• A company has already received rescue/restructuring aid and the proceedings are still pending.
• Specific rules for large companies apply (debt-equity ratio, interest-cover ratio)

Practical tip: Documents required for the application 

Rapid processing of a loan application requires complete, meaningful and comprehensible documents. These include:

• a brief description of the company’s position in the context of the coronavirus crisis
• financial annual statements for the last two financial years (2019 and 2020)
• qualified business assessment (BWA) as of December 31, 2020, if no current annual financial statements are available
• current bank overview (overview of existing financing with details of collateral)
• revenue planning 2021 (if possible also 2022) as a basis for determining capital requirements
• determination of capital requirements (determination of the applied credit volume)
• presentation of future debt servicing capacity

Status: 14 May 2021

Author: Cornelia Barnbrook, tax consultant, specialist for international tax

Source: KfW (Kreditanstalt für Wiederaufbau)

Photo: Adobe Stock, joda

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