Covid 19 – Financial aid from federal and state governments

In response to the corona epidemic, on 19 March 2020 the European Commission adopted the "Temporary Framework for State aid measures to support the economy in the current COVID-19 outbreak" (Befristeter Rahmen für staatliche Beihilfen zur Stützung der Wirtschaft angesichts des derzeitigen Ausbruchs von COVID-19). It provides the framework for Member States' emergency programmes. Germany is responding with a number of measures to mitigate the economic impact of the corona epidemic on businesses at federal and state level. We have compiled an overview of the public corona financial aid:

1. From instant emergency aid to transitional aid

The corona emergency aid (Soforthilfe) of the Federal Government (aid in form of non-repayable funds) for self-employed persons, members of liberal professions and small enterprises including farmers with up to 10 employees (full-time equivalents) could be applied for until 31 May 2020.


Now, public support from the Federal Government will continue for the months June to August 2020 in the form of the corona transitional aid (Überbrückungshilfe). Companies that have made use of the instant emergency aid provided by the Federal Government or the Federal States, but continue to be affected by sales shortfalls, are once again eligible to apply. However, if the funding periods for emergency aid and transitional aid overlap, the emergency aid will be credited pro rata to the transitional aid.


Eligible to apply are


  • all companies and organizations (including self-employed persons, self-employed members of the liberal professions as their main occupation or non-profit organizations),
  • unless they qualify for the Economic Stabilisation Fund (Wirtschaftsstabilisierungsfond, see below), and
  • if their sales in the months April and May 2020 combined have decreased by at least 60% compared to April and May 2019.

A company is defined as any legally independent unit (with its own legal personality), irrespective of its legal form, which is economically active on the market and had at least one employee (irrespective of the number of hours worked) on the closing date of 29 February 2020. In the case of civil law partnerships (Gesellschaften bürgerlichen Rechts) and companies of other legal forms without any other employees (in addition to the owners), at least one shareholder must be working for the company in his main occupation.


Deviating from this, according to the Federal Ministry for Economic Affairs and Energy (Bundesamt für Wirtschaft und Energie, "BMWI") the following companies are explicitly not eligible to apply (exclusion criteria):


  • companies that not registered with a German tax office (Finanzamt),
  • companies without a domestic permanent establishment or registered office,
  • companies that were already in (economic) difficulties (EU-Definition pdf download) on 31 December 2019 and have not overcome this status thereafter (exceptions may apply to small companies),
  • companies founded after 31 October 2019,
  • public enterprises,
  • companies (including affiliated companies) that meet the size criteria for access to the Economic Stabilisation Fund (see below). These companies are not eligible to apply for the corona transitional aid, regardless of whether they actually applied to the Economic Stabilisation Fund or not,
  • companies with annual sales of at least 750 million euros, and
  • freelancer or self-employed persons in their second occupation.

Applications can be submitted via in a fully digitized procedure. The application is made exclusively by tax consultants, lawyers, auditors and certified accountants. The application deadline has been extended by one month to 30 September 2020.


Corona transitional aid can be applied for a maximum of three months (June, July and August 2020). The amount of the funding is based on the expected drop in sales in the funding months of June, July and August 2020 in relation to the respective reference months.


The transitional aid reimburses a share of


  • 80 percent of eligible fixed costs in the event of a drop in sales > 70 percent
  • 50 percent of eligible fixed costs in the event of a drop in sales ≥ 50 percent and ≤ 70 percent
  • 40 percent of eligible fixed costs in case of drop in sales ≥ 40 percent and < 50 percent

in the funding month compared to the same month of the previous year. For companies founded between 1 June 2019 and 31 October 2019, the months December 2019 to February 2020 are to be used for comparison.


The calculation is made individually for each month. If the drop in sales in a funding month is less than 40 percent compared to the same month in the previous year, the transitional aid for the respective funding month is not applicable.


The maximum funding is 150,000 euros (50,000 euros per month). For companies with up to five employees, the maximum reimbursement amount is 3,000 euros per month; for companies with up to ten employees, 5,000 euros per month. The maximum reimbursement amounts for small companies can be exceeded in justified exceptional cases.


2. Economic Stabilisation Fund

In addition, on 25 March 2020, the German parliament (Bundestag) resolved to establish a special fund called the Economic Stabilisation Fund (Wirtschaftsstabilisierungsfond, "WSF"), to support the real economy. Recapitalisation measures of the WSF up to a volume of 250 million euros as well as WSF guarantees no longer have to be individually submitted to the EU Commission.


The aim of the WSF is to ensure the liquidity and solvency of companies that were healthy and competitive before the corona pandemic and whose threatened existence would have a considerable impact on Germany as a business location or on the German labour market. The WSF supplements the special support programmes launched by the German development bank (Kreditanstalt für Wiederaufbau, "KfW") (see below).


The following instruments will be placed in the WSF:


  • Guarantee framework of 400 billion euros, for debt instruments issued until 31 December 2021 and justified liabilities of companies, to help companies to refinance themselves on the capital market (bridging liquidity bottlenecks);
  • a 100 billion euros credit authorisation to strengthen the capital of companies, e.g. by acquiring equity interests or silent partnerships or by subscribing to bonds (recapitalisation); and
  • a further 100 billion euros credit authorisation to refinance the KfW special programmes (see below).

Addressees are businesses that meet at least two of the following three criteria:


  • a balance sheet total of more than 43 million euros;
  • sales of more than 50 million euros; and
  • more than 249 employees on an annual average.

Further requirements that a company must fulfil in order to benefit from measures under the WSF:


  • other financing possibilities are not available to the company;
  • the stabilisation measures must provide the company with clear, independent prospects of continuation once the pandemic crisis will have been overcome;
  • on 31 December 2019, the EU definition of a "firm in difficulty" must not have been met (see above);
  • the company must be able to demonstrate that it is pursuing sound and prudent commercial policies; and
  • a contribution must be made to stabilising production chains and safeguarding jobs.

The specific requirements of the Economic Stabilisation Fund are determined by framework regulations which are published on the website of the BMWI at (in German). The BMWI is also available as contact for companies. Applications can be made online at


Generally, the Federal Ministry of Finance will decide on stabilization measures together with the BMWI at the request of the company and at its due discretion, taking into account


  • the importance of the company for the German economy;
  • the urgency;
  • the impact on the labour market and competition; and
  • the principle of the most economical use of WSF funds.

However, companies can generally not claim to receive support from the WSF.


3. KfW-Special-Programme 2020 - Expansion of liquidity support

Under the KfW-Special-Programme 2020 launched on 23 March 2020, KfW's existing liquidity programmes, in particular the KfW-Entrepreneur-Loan (for existing enterprises) (KfW-Unternehmerkredit) and the ERP-Start-up-Loan (ERP-Gründerkredit), have been expanded and the conditions have been eased: Entrepreneur loans have been opened up for large enterprises with a turnover of up to 2 billion euros (previously: 500 million euros) and KfW's risk assumption (indemnity against liability) for ERP Start-up Loans has been increased to up to 80% (ERP Start-up Loan - StartGeld) or 90% (ERP Start-up Loan - Universell). This shall encourage banks to grant loans to businesses in need. Since 15 April 2020, companies may also apply for the "KfW Instant Loan 2020" (KfW-Schnellkredit 2020) in a non-bureaucratic way. In addition, improvements have been made to existing KfW special programmes. Such improvements comprise an extension of the loan term from up to five to up to six years, and for loans of up to 800,000 euros even up to 10 years.


Applications are not to be submitted directly to KfW, but via a financing partner (house bank, savings bank, insurance company, financial intermediary or similar). Under the following link, you will find general information regarding the KfW-Special-Programme and how to apply:


3.1 ERP Start-up Loan – StartMoney (ERP-Gründerkredit – StartGeld) (for companies younger than 5 years)


  • Financing of investments and working capital
  • Business start-up and consolidation in part-time or full-time employment up to 5 years after foundation
  • No equity required
  • Up to 30,000 euros loan amount
  • Easy access to credit: up to 80% risk assumption by KfW

Further information can be found here (in German).


3.2 ERP Start-up Loan – Universal (ERP-Gründerkredit – Universell) (for companies younger than 5 years)


  • Financing of investments and working capital
  • Up to 1 billion euros loan amount (the maximum loan amount depends on certain key figures; for details see the link below to the KfW website)
  • Up to 90 % risk assumption by KfW

Further information can be found here (in German).


3.3 KfW-Entrepreneur-Loan (KfW-Unternehmerkredit) (for companies older than 5 years)


  • Financing of investments and working capital
  • Up to 1 billion euros loan amount (the maximum loan amount depends on certain key figures, for details see the link below to the KfW website)
  • For companies that have been on the market for at least 5 years
  • Up to 90 % risk assumption by KfW

Further information can be found here.


3.4 KfW syndicated financing (KfW-Konsortialfinanzierung) from EUR 25 million


  • KfW participates in syndicated financing for investments and working capital of medium-sized and large enterprises
  • Up to 80% risk assumption by KfW, but no more than 50% of total debt
  • KfW's share of the risk is at least 25 million euros and is limited to

25 % of the annual turnover in 2019, or

twice the wage costs of 2019, or

the current financing requirements for the next 12 months


Further information can be found here.


3.5 KfW Instant Loan 2020


  • Financing of investments and working capital
  • For enterprises with more than 10 employees
  • For companies that have been active in the market at least since 1 January 2019 and have most recently made a profit – either in 2019 or in the sum of the years 2017 to 2019 (or since the company has been active in the market, if the period is shorter)
  • Fast credit is fully secured by a guarantee from the Federal Government, so house banks bear no risk of their own
  • Loans of up to 25 per cent of total turnover in 2019, up to 800,000 euros for companies with more than 50 employees, up to 500,000 euros for companies with up to 50 employees
  • Up to 2 grace years at the beginning without payments
  • Rapid credit approval without further credit risk assessment
  • No collateral required
  • 100% Risk assumption by KfW

Further information can be found here.


4. Guarantees from guarantee banks (Bürgschaftsbanken)

Besides obtaining financial aid in form of loans, it is also possible to obtain financial aid in form of guarantees by the guarantee banks of the federal states. Further information for companies affected by the crisis and an application form can be found on the website of the association of German guarantee banks: The association of German guarantee banks (Verband Deutscher Bürgschaftsbanken) has compiled an overview of the extensions of the framework conditions for default guarantees (here (in German) and links to the websites of the guarantee banks of the individual federal states can be found via the association's member search function here (in German)


For all questions arising in this context, please reach out to your usual kallan contact persons in our Banking and Finance team or contact us at


The situation resulting from the effects of coronavirus is changing rapidly. The above information reflects the situation on 1 September 2020, 18:30 pm which may have changed since then.