Joint Press Release: We are continuing our support for start-ups and SMEs – EUR 2 billion package of measures to be extended

The Federal Ministry for Economic Affairs and Energy and the Federal Ministry of Finance have authorised KfW to extend the EUR 2 billion package of measures for start-ups and small medium-sized enterprises until 30 June 2021 to mitigate the consequences of the coronavirus pandemic. It has been possible until now to use funds from the package of measures for financing commitments until 31 December 2020. The extension will allow young companies to continue to receive equity and equity-like financing under the package for another six months.

State Secretary in the Federal Ministry for Economic Affairs Dr Nußbaum said: “We want them to be able to get back on their feet after the crisis. That is why we made EUR 2 billion available to start-ups and small SMEs already this spring to respond to the specific financing needs of these companies. The package of measures has been very well received, which is why we extended it. Companies can now benefit from the EUR 2 billion package until 30 June 2021.”

State Secretary for Finance Dr Kukies: “Our rescue package is being extended. The ongoing pandemic-related restrictions on economic and social life hit start-ups and small SMEs particularly hard. The fact that support has now been extended until 30 June 2021 is a good investment in Germany’s innovative capacity and thus its viability in the future.”

Member of KfW’s Executive Board Dr Ingrid Hengster said: “We are pleased to report that the number of technology- and growth-oriented start-ups in Germany has increased significantly in recent years. These young companies are particularly valuable for our economy because they have great potential for innovation and jobs and provide key impetus for change. KfW and KfW Capital are making every effort to use the federal funds to ensure that these young companies survive the coronavirus crisis as intact as possible.”

The EUR 2 billion package of measures to support start-ups and small medium-sized enterprises has been available since mid-May 2020 and is based on two pillars: Pillar 1 builds on the existing cooperation between the German Federal Government, KfW Capital and the European Investment Fund (EIF) to make funds from the package of measures available to private venture capital funds to invest in start-ups (“Corona Matching Facility”). In addition, venture capital funds such as High-Tech Gründerfonds (HTGF) or coparion can apply for liquidity support for start-ups; funds are also granted through the ERP Start-up-Fund financing programme.

Pillar 2 is available to start-ups and small SMEs that do not have access to Pillar 1 through a VC fund: in this case, the funds from the EUR 2 billion package are provided to companies in the form of mezzanine or equity financing through the promotional institutions of the federal states – either directly or through other intermediaries such as family offices, business angels or the SME investment firms of the federal states. The prerequisite for participation in Pillar 2 is that the annual sales volume does not exceed EUR 75 million. The funds are provided to the promotional institutions of the federal states at the risk of the German Federal Government in the form of global loans by KfW that are exempt from liability. The public share in the respective financing can be up to EUR 800,000 per company as per a federal regulation to support companies affected by the coronavirus outbreak (Bundesregelung Kleinbeihilfen 2020).

Under Pillar 1, applications from venture capital fund managers have so far been approved for a total of around EUR 860 million. The plan is to finance roughly 350 start-ups with these funds. To implement Pillar 2, KfW has to date concluded global loan agreements with the promotional institutions from the following federal states for a total volume of around EUR 556 million: Baden-Württemberg, Bavaria, Berlin, Brandenburg, Bremen, Hamburg, Lower Saxony, North Rhine-Westphalia, Rhineland-Palatinate, Saxony, Saxony-Anhalt, Schleswig-Holstein and Thuringia. Financing in Mecklenburg-Western Pomerania is handled by the promotional institutions of the federal state of Thuringia. The contracts with the promotional institutions of the federal states of Hesse and Saarland are due to be signed soon. Some of the promotional institutions of the federal states are also planning to increase their global loans with KfW as a result of strong demand now that the package has been extended.