As many micro-enterprises are experiencing financial difficulties due to the current coronavirus crisis, LfA Förderbank Bayern has introduced a new loan. The LfA Quick Loan is available to companies with up to 10 employees and comes with 100 percent liability indemnification from the main bank.
With this new quick loan, LfA is addressing one of the most pressing problems in the financing of micro-enterprises during the current crisis. Due to the current restrictions, many of them are experiencing financial difficulties through no fault of their own. At the same time, they have not received the funds from previous loan programs, which makes them uncreditworthy in the current crisis. The 100 percent liability exemption eliminates this problem, as the Development Bank now assumes all guarantees. The EU Commission authorized this increase in state guarantees at the beginning of April.
Companies with up to five employees can receive loans of up to €50,000, and those with up to ten employees can receive loans of up to €100,000 (less the Corona emergency aid in each case). Commercially oriented companies, sole proprietors, and members of the liberal professions with up to ten employees who have a permanent establishment or branch in Bavaria are eligible to apply. They must have been active on the market since at least October 1, 2019, and not have been listed as a company in difficulty according to the EU definition until December 31, 2019. Furthermore, the company must have made a profit for the combined period from 2017 to 2019 or in 2019.
It may be particularly important for startups that companies with private equity investors can also receive funding, regardless of the size of their investment. However, the new LfA loan can be tied to the condition that no distributions or withdrawals are made during the loan term.
The LfA plans to open the application process at the beginning of May. The development bank is currently still conducting technical tests with its partner banks, as applications and disbursements are handled through the bank's principal banks.
LfA loans are in high demand
In addition to the planned quick loan, the LfA has further Loan programs launched to support companies of various sizes to help in the Corona crisisAlong with the Corona emergency aid, these are the Bavarian state government's most important instruments for supporting companies during the Corona crisis. Bavaria's Minister of Economic Affairs Hubert Aiwanger is convinced that these support services will help entrepreneurs through the Corona crisis:
"We are providing support and have chosen the right balance of transfer payments, loans, and guarantees. Now we need moderate easing measures to give the economy a new perspective."
Other measures include the Corona protective shield loan for financing investments and working capital for small and medium-sized enterprises (SMEs) and freelancers. According to the Bavarian Ministry of Economic Affairs, more than 400 applications for this loan had been received by April 27, totaling approximately €97 million. 168 applications were received for the universal loan for financing investments, inventories, and working capital, as well as for long-term consolidations and debt restructurings, totaling more than €39 million. And 74 applications for the emergency loan for consolidations and debt restructurings in medium-sized commercial enterprises were received, totaling approximately €17 million.
In addition, 40 LfA guarantees and state guarantees, for which the LfA acts as a mandate, were applied for, with a guarantee amount of over €400 million. The Corona emergency aid paid out as of April 28 amounts to €1.15 billion.
