KfW and German authorities introduce new funding scheme for startups and successions
KfW and government partners have launched a financing program to support business startups and successions, providing low-interest loans starting November 1, 2024.
The German development bank KfW, in collaboration with the Federal Ministry for Economic Affairs and Climate Action and the Federal Ministry of Finance, has introduced a new financing vehicle designed to boost small and medium-sized enterprises. The program provides subsidized loans for startups and business successions using funds from the European Recovery Program (ERP).
Under the new structure, local partner banks are fully relieved of credit risk by regional guarantee banks, which are backed by an 80 percent federal counter-guarantee. This arrangement eliminates the need for applicants to provide traditional collateral, allowing for more accessible credit terms. KfW acts as the refinancing institution, ensuring that loans are issued at attractive interest rates.
Eligible projects can receive funding for up to 35 percent of their total investment, capped at 500,000 euros. The application process is integrated into the standard banking system: borrowers apply through their local bank, which coordinates the guarantee and refinancing directly with the state-backed entities. The program is set to become available on November 1, 2024.