Aid for trade and culture: How Berlin companies get money

Because of the corona epidemic, restaurants, bars, and clubs have also closed in Berlin and Brandenburg. Many shops do the same. And artists or media professionals will have to forego orders because programs or performances will be canceled in the coming weeks. All of them lose all or part of their normal sales. How do these self-employed and often small companies get hold of the financial aid that the federal and state governments offer?

For example, the federal government wants to pay grants to taxi companies, bookstores, bars or handicraft businesses that have little or no turnover, without asking for them back. Companies with up to five employees should receive a one-off payment of 9,000 euros for three months, up to ten employees 15,000 euros.

The money is to flow so that the self-employed, individual and small entrepreneurs can continue to pay their fixed costs, such as business rent. They have to prove that they got into trouble because of Corona.

Grant program of the Senate

These funds are to be paid out by the federal states. In Berlin, for example, the Senate or the state-owned investment bank (IBB) would be responsible. Who exactly was not clear at the time of going to press. In addition, the Senate has decided on its own grant program, through which the self-employed and small companies with up to five employees initially receive 5,000 euros to cover the first fixed costs.

As of Friday, March 27th, IBB will accept applications for this. Advance applications will not be considered. The good news: You can combine the federal and state subsidies, they add up.

In order to help companies, the public KfW banking group also offers an unlimited loan program in total. These loans flow to the commercial banks, which are supposed to pass them on to the needy companies. The companies’ first path, therefore, leads to their respective house bank, for example, the Berliner Sparkasse, Berliner Volksbank or the local branches of Deutscher Bank, Commerzbank, and other institutes.

KfW loans

At Berliner Sparkasse, it is said that applications for KfW loans can be made starting Monday, March 23. The programs “KfW Entrepreneur Loan” and “ERP Start-Up Loan – Universal” come into question first. They are aimed at all companies, whether small or large. The Sparkasse recommends contacting personal advisors in the branches or company centers.

Applicants should submit a brief description of the effects of the corona epidemic on their company as documents. In addition, the annual financial statements for 2017 and 2018, the business analysis 2019 and liquidity planning for the coming year are required.

It is not going to be easy to determine what sum each company will need to cover its costs in the coming months. After all, nobody knows how the crisis will go on and how long a curfew will last. However, the Berliner Volksbank advises not to set the liquidity requirement too high in order not to make the calculation appear unreliable.

Interest depending on credit rating

The interest on the loans depends on the creditworthiness of the customers. According to the KfW overview, they start at one percent per year. “We expect the first payments to be made before Easter,” says the Berliner Sparkasse. The institute also offers its corporate customers to suspend the repayment of loans that are already in progress.

There is also a second way that companies and self-employed people can take. The state guarantee banks also offer support, for example, the Berlin guarantee bank. In many cases, it might be a good idea to take both paths – house bank and surety bank – at the same time. The latter provide collateral that makes it easier for house banks to grant KfW loans and their own loans.

“Companies can contact us via the portal,” says Steffen Hartung, Managing Director of Burgschaftsbank Berlin. This can also be useful because small companies or the self-employed sometimes do not have a house bank with which they have close relationships. “If you don’t have a fixed house bank, we will try to find one,” said Hartung.

Two weeks of processing time

For the documents for the loan application, the Burgschaftsbank essentially needs the business evaluation of December 2019, the 2018 annual financial statements and a liquidity plan for the funds required for the next six months. “The credit should be ready for the respective company within about two weeks,” says Hartung.

In addition to these nationwide credit programs for companies, IBB also provides loans to small and medium-sized enterprises (SMEs). Up to EUR 500,000 loan amount is incurred for six months. Applications are now possible.

At least for the first time, there seems to be helpful for companies – theoretically. Now the practical problems should come up. Does the money reach the companies in time so that they don’t go bankrupt?

This article appears as a supplement to the TEH themed right in the print edition of TEH Berlin on March 28th