The state development bank KfW is reorganizing its SME promotion and retains a controversial regulation from the Corona emergency aid: namely the assumption of credit risks from private banks and savings banks.

As usual, the state bank will continue to issue its promotional loans through the recipients' respective house banks.

What is new is that it offers the on-going banks and savings banks the option of partially assuming the credit risk of 50 percent for companies that have been on the market for at least three years.

This release from liability is intended to facilitate a positive credit decision, it said on Friday in a joint communication from KfW and the Federal Ministry of Economics.

Tim Kanning

Editor in business.

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The fact that the development bank relieves the banks and savings banks of part of the default risk was introduced with the Corona aid loans.

In order to accelerate the granting of loans to the distressed companies, KfW has assumed 80, 90 or even 100 percent of the default risk, depending on the volume.

This of course put the banks in a very comfortable situation: they were able to grant their customers loans in the crisis and earn money accordingly, but the state bank, i.e. the taxpayer, took on the risk of default.

Funding for SMEs detoxified

A good year ago, the FAZ first reported that Deutsche Bank, for example, advocated including this exemption from liability in KfW's normal funding programs, for example to finance investments in future technologies. The fact that a maximum of 50 percent of the risks are now assumed is intended to ensure that the banks that carry out the risk assessment for the loans also do them carefully. The default rates of the Corona aid loans have so far been manageable.

Overall, KfW's SME funding has been purged.

Basically there is now one funding program for small and medium-sized companies with an annual turnover of up to 50 million euros and one for large medium-sized companies with up to 500 million euros in annual turnover.

You can use the money to finance investments or your working capital at reduced interest rates.

Economics Minister Robert Habeck (Greens) emphasized that the new programs should also finance the transition to a climate-neutral and digital economy.

The new KfW boss Stefan Wintels said: "In the coming years, considerable investments will be necessary in order to cope with the consequences of the pandemic and to shape the sustainable transformation of the economy."