German development bank KfW announces loan program for start-ups

Source: Xinhua| 2019-03-09 00:13:23|Editor: Mu Xuequan
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BERLIN, March 8 (Xinhua) -- Start-ups and young companies in Germany will have access to a special KfW promotional loan program from July onwards, the German state-owned development bank announced on Friday.

The innovation and digitalization program had previously only been available to small and medium-sized companies in Germany.

Enabling start-ups access to promotional loans means that, for the first time, KfW will be providing young, innovative companies with debt capital. The loan program is aimed particularly at young technology companies that have already received financing from venture capitalists in the past.

Until now, KfW had only indirectly supported start-ups through its subsidiary KfW Capital, which invests in German and European venture capital funds. These funds frequently only provided start-ups with equity capital.

Speaking to Xinhua on Friday, a KfW spokesperson said that the new loan program represented "another building block in the financing range for start-ups and young technology companies" that would help support Germany's start-ups.

"There is no upper limit" for funding for start-ups applying for the loan program, the KfW spokesperson added.

Start-ups and growing companies in Germany have often struggled to get credit from banks or investors to further expand their business. According to KPMG's German start-up monitor, around 80 percent of Germany's start-ups have drawn on private savings to fund their business.

KfW managing director Ingrid Hengster had previously estimated a financing gap in the early growth phase for start-ups of 500 to 600 million euros (562 to 674 million U.S. dollars) per year.

"Innovative, high-growth technology companies in Germany still find too little growth capital available. This is why debt capital is playing an increasingly important role because it offers planning security through fixed interest rates and maturities,"Hengster told the German newspaper Handelsblatt on Friday.

The KfW had set up an online platform together with the German Federal Ministry for Economic Affairs and Energy (BMWi) to offer support to start-ups last year. The platform allowed founders to exchange information with their networks and make contact with regional players.

Last November, the German Federal Ministry for Economic Affairs and Energy (BMWi) launched "GO!", a new start-up offensive. "We have to get more people interested in self-employment. The aim of our GO! start-up offensive is to strengthen the start-up culture in Germany," said German economy minister Peter Altmaier following the launch.