Your company is already operating in Germany and you would now like to export worldwide?

Public Loans, Public Guarantees

Investors can access public loan programs in Germany. These programs usually offer loans at below current market interest rates in combination with generous grace periods.

Public loans are provided by "development banks" - publicly owned and organized banks that exist at the national and state level. The bank of the European Union (EU) is the European Investment Bank (EIB).

Each financial tool or program offered by such public banks is accessible to foreign companies planning to invest in Germany and subject to the same conditions available to investors from Germany.

Interest-reduced loans offered by state-owned business development banks  in Germany may constitute a subsidy and can usually be combined with other public funding instruments. Please note that the total amount of combined cash incentives available may be reduced when combined with other programs.

Public Loan Programs - National Level

The KfW Group is the nationally operating development bank in Germany. The bank is organized into different divisions - each specialized according to various target groups and financing instruments.

A number of different financing tools are available. These include promotional loan programs, mezzanine financing and venture capital. 

Investors interested in financing a project  using KfW loans contact the principal bank in Germany for preparation of an application as part of the loans assessment process.

State Development Bank Loan Programs

In addition to the KfW Group, each German federal state has its own development bank financing projects within the respective state. They offer their own financing programs with a special focus on promotional loans.

State development bank loans are generally tailored to meet the requirements of small and medium-sized enterprises (according to the EU Commission's SME definition).

Applications are made through the investor's principal bank to the respective state development bank.

European Investment Bank (EIB) Loan Programs

The EIB provides loans and further financing tools (e.g. guarantees, venture capital) at favorable conditions.

To receive support, projects must be viable in predefined areas:

  • Climate and ecological sustainability
  • Sustainable energy and natural resources
  • Innovation, digitalization
  • Infrastructure
  • SMEs, mid-caps

European Investment Bank financing solutions are open to large enterprises and large projects as well as SMEs and smaller projects. As a rule, the EIB directly covers up to 50 percent of the total investment costs  in project loan cases. The minimum project loan amount is EUR 25 million.

The main financing tools are intermediated loans. Credit lines to banks and financial institutions enable them to provide financial means to SMEs with eligible investment programs or for projects costing less than EUR 25 million.

EIB Loan Programs

Public Guarantees

Companies can often experience difficulties securing financing where the required loans can only be collateralized to an insufficient degree. In these cases – with economically appropriate projects – public guarantees can replace or supplement any shortfall in securities.

How Public Guarantees Work

A public guarantee is a financial instrument that encourages financial institutions, i.e. commercial banks, to offer loans to companies. Guarantee programs are specially designed to help enterprises obtain bank loans by dealing with the collateral constraint. 

The guarantee functions as a promise by the guarantor to the lender that, in the event that the borrower defaults on payment, the guarantor will repay the lender a specified proportion of the foregone principal. In other words, guarantees will be given by a guarantor to pay all or part of the loan in the case of borrower payment default.

Different Public Guarantee Programs

Different types of public guarantee programs exist to support the loan financing of different types of investment projects. The guarantee program depends on the required amount, the investment region and the size of the company. 

The maturity period of guarantees depends on the financing puposes and the loan term.

Commitments vouched for within public guarantees are normally subject to intensive individual examination by external assessors. Guarantee fees are paid annually. The fee paid is a percentage of the actual guaranteed amount at the beginning of the respective year. The fee is fixed over the whole duration of the loan.

Guarantee programs are available via a federal state's guarantee bank or the individual state government depending on the required guarantee amount.

Guarantees by Guarantee Banks

The public guarantee banks of the federal states in Germany are able to issue guarantees to small and medium-sized companies. They usually guarantee for amounts of up to EUR 2 million and cover up to 80 percent of the loan amount.

An application has to be filed with the guaranteeing bank or the authorized institution of the federal state the respective investment project is located in.

Guarantees by Individual State Governments

Public guarantees issued by individual state governments are available throughout Germany. Loan amounts, usually larger than  EUR 10 million, can receive up to 80 percent guarantee coverage. 

Applications have to be submitted  to the respective state via the investor's bank before the investment is initiated. A state guarantee committee then deliberates on the the validity of the application and issues a recommendation. The final step sees the respective federal state finance ministry decide on the allocation of a state guarantee.

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