#bytevaria Aug 08, 2019

The European Recovery Program’s digitization loan opens up for start-ups

Since the beginning of July 2019, it’s no longer exclusively SMEs who can get funding through the European Community. The European Recovery Program’s digitization credit is namely also available for start-ups and young companies from now on. Here in Germany the Kreditanstalt für Wiederaufbau (KfW) is financing the different stages of the automation of products, production processes and industry 4.0 processes through the so-called “digitization and innovation loan”.

The KfW loan now promises a loan volume of EUR 25,000 to EUR 25 million to start-ups too. Only SMEs that had been active on the market for at least two years could apply for funding up to July 2019. But now the low-interest loan is also open to start-ups and entrepreneurs who are planning an innovative enterprise. The interest subsidies are borne jointly by the federal budget and the ERP’s special assets.

The start-up culture is to be strengthened throughout Germany thanks to the new funding programmes. As part of the “GO!” start-up campaign, the opening up of the digitization loans serves entrepreneurs by making cheap financing possible for innovative business models to implement their projects. With the KfW’s start-up loan, enterprises can finance up to 100 per cent of the investment costs and resources eligible for funding. The loan is particularly attractive due to the fact that it can be combined with other KfW funding offers. Start-ups and KfW have already cooperated at numerous start-up centres in Bavaria, making it easy to tap into new entrepreneurial synergies.

Who can apply for the loan?

The following are eligible to apply:

  • Small companies
  • SME companies with a turnover of up to EUR 500 million which are majority-owned by private individuals
  • Freelancers
  • Start-ups who are planning an innovative company

For this clientèle the digitization loan is intended to fund investments and resources which result in the context of a digitization and innovation project.

Where can I apply for an ERP loan?

Companies or start-ups interested in financing have to apply for a loan from their bank. This bank acts as KfW's financing partner. KfW offers to assume a large part of the default risk to make it easier for the participating banks to grant loans. However, this 70 percent assumption of liability is only possible with loans to businesses with less than 500 employees. Anyone who would like more detailed information about the KfW’s ERP digitization and innovation loan and the associated possibilities for SMEs and start-ups can obtain this from the Federal Ministry of Energy and Economic Affairs website or directly from KfW.

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