KfW strengthens its financing offer for SMEs on the path to the digital future

Joint press release

• New KfW Loan for Growth will help successful larger SMEs to invest in innovation and digitalisation
• Programme complements existing promotional product range with facility for risk participation by KfW in cooperation with European Investment Bank (EIB) under Investment Plan for Europe

Frankfurt / Luxemburg, 6 June 2018

KfW will expand its range of promotional products in the fields of innovation and digitalisation. The new KfW Loan for Growth will support the innovation and digitalisation projects of larger medium-sized enterprises. It will finance innovative projects to open up new markets or customer groups or to intensify significantly the digitalisation of businesses. The new KfW programme is part of the German government's Tech Growth Fund initiative, which aims to support companies in their growth phase by expanding the range of state financing instruments available.

With the new KfW Loan for Growth, KfW is adding a facility for individually structured large-volume financing of innovation and digitalisation measures to its existing standardised range of bank-intermediated promotional products. While KfW’s existing promotional programmes with risk participation are aimed at companies with annual turnovers of up to EUR 500 million, with this new product KfW will also be able to take on a part of partner banks’ credit risk for larger medium-sized companies with annual turnovers of up to EUR 2 billion. This offer addresses the difficulties frequently encountered in financing innovation and digitalisation projects as the likelihood of such projects being successful is often hard to predict.

Under the new promotional programme, KfW will take part on the same terms in a debt financing operation of one or more partner banks, covering up to 70% of the project risk through a risk sub-participation. KfW will secure this credit risk in as far as possible through the European Investment Bank (EIB) by means of a 50% guarantee from the European Fund for Strategic Investments (EFSI). EFSI is an essential pillar of the Investment Plan for Europe (IPE) – also known as the Juncker Plan – under which the EIB and the European Commission are working together as strategic partners and the EIB’s financing operations boost the competitiveness of the European economy. The broad spreading of risk among several partners under the KfW Loan for Growth will also facilitate the financing of larger loan volumes.

Dr Ingrid Hengster, Member of KfW's Executive Board with responsibility for domestic promotional business, stated: “Larger SMEs are the drivers of digitalisation and innovation in Germany. As first movers, they also provide impetus for smaller companies in crucial areas for the future and are therefore key to sustainable growth, employment and the long-term competitiveness of the German economy. With the new KfW Loan for Growth, we are helping to overcome the persistent difficulties in financing major innovation and digitalisation investments.”

EIB Vice-President Ambroise Fayolle, who is responsible for operations in Germany and EFSI at the EU bank, said: “One of the EU bank’s priorities is to support rapidly growing SMEs, which invest in innovation, as these companies will ensure growth and jobs in the future, particularly in countries like Germany.” He went on to say: “This transaction is a cornerstone in the EU bank’s cooperation with KfW under the Investment Plan for Europe. It is the first bilateral operation between KfW and the EIB for a decade, and we are absolutely convinced that the project provides an excellent basis for further transactions between KfW and the EIB in the innovation area.”

European Commission Vice-President Jyrki Katainen said: "With this new KfW Loan for Growth initiative, supported by the EIB and the Investment Plan for Europe, mid-sized companies in Germany wishing to develop their businesses can apply for extra financial support to invest in innovation and digitalisation. These are key objectives of the EU and precisely what the Investment Plan was created for."

Note to the editor:

KfW
KfW is one of the world’s leading promotional banks. With its decades of experience, KfW is committed to improving economic, social and ecological living conditions across the globe on behalf of the Federal Republic of Germany and the federal states. To do this, it provided funds totalling EUR 76.5 billion in 2017 alone; and of this, 43 % went into measures for protecting the environment and combating climate change.

KfW does not have any branches and does not hold customer deposits. It refinances its promotional business almost entirely through the international capital markets. In 2017 KfW raised some EUR 78 billion for this purpose. In Germany, KfW Group is represented in Frankfurt, Berlin, Bonn and Cologne. Its network includes 80 offices and representations around the world.

European Investment Bank
The European Investment Bank (EIB) is the long-term lending institution of the European Union, owned by its Member States. It makes long-term finance available for sound investment in order to contribute towards EU policy goals.

Investment Plan for Europe
The Investment Plan for Europe (the Juncker Plan) is one of the EU's key actions to boost investment in Europe, thereby creating jobs and fostering growth. To this end, smarter use will be made of new and existing financial resources. The EIB Group is playing a vital role in this investment plan. With guarantees from the European Fund for Strategic Investments (EFSI), the EIB and the European Investment Fund (EIF) are able to take on a higher share of the risk in projects, encouraging private investors to participate in these projects. EFSI was initially intended to mobilise investment of EUR 315 billion throughout the EU over a period of three years until mid-2018. In December 2017, the European Parliament and Member States reached an agreement to extend the duration of EFSI to 2020 and increase its financial capacity to EUR 500 billion. In addition to EFSI, the new EIAH advisory platform helps public and private-sector project promoters to structure investment projects more professionally. The investment plan should also create a more investment-friendly EU regulatory environment, particularly in the digital, energy and capital markets sectors.

Press contact EIB:
Christof Roche, , tel.: +352 43 79 89013
Mobile: +32 479 65 05 88
Website: www.eib.org/press - Press Office: +352 4379 21000 –