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The Importance of 100% Risk Coverage
Starting a business or taking over an existing one often poses a major financial challenge. This is where the ERP Start-up and Succession Loan comes in. Its central feature is the full assumption of risk by the guarantee banks. This is because the primary banks are completely relieved of the credit default risk through a 100% guarantee from the respective guarantee bank. This not only provides maximum security—which is intended to facilitate a positive lending decision by the primary banks—but also significantly increases the chances of securing financing for the projects.
The Role of the Guarantee Banks
The guarantee banks play a crucial role in this support program. They provide the guarantee for the loans, thereby enabling low-interest financing through KfW. This guarantee covers financing of up to 500,000 euros per application and can cover up to 35% of the total project cost. Thanks to their many years of experience and their network of chambers of commerce and trade associations, the guarantee banks also serve as financing experts with their own financing portal (https://finanzierungsportal.ermoeglicher.de), acting as competent partners.
Benefits for Primary Banks and Lending Institutions
The cooperation between guarantee banks and KfW on the ERP promotional loan also offers significant advantages to primary banks, as it relieves the primary bank of 100% of the risk. The federal government provides an 80% counter-guarantee for this purpose. KfW refinances the primary banks by making the loan amounts available at reduced interest rates using funds from the European Recovery Program (ERP) special fund.
Benefits for Founders and Successors
The program benefits both startups up to five years after launch and business successions. Applicants are not required to provide collateral. Thanks to funding from the ERP Special Fund and the assumption of credit default risk by the guarantee banks and the federal government, they benefit from particularly favorable interest rates. In addition, the program can be combined with other support programs as well as risk mitigation instruments offered by the guarantee banks. Two loan terms are available for this support. Applying for the ERP support loan is simple and transparent. Applicants first apply for the loan for their project with their primary bank. The bank then submits an application for a guarantee through the central website kapital.ermoeglicher.de to the relevant guarantee bank. Once the guarantee has been granted, the primary bank applies for the refinancing loan from KfW, which reviews and approves the application fully automatically.
Important Impulse
The ERP Development Loan Program for Start-ups and Business Succession provides several key incentives designed to sustainably strengthen both the start-up and business succession landscapes in Germany. It promotes innovation and entrepreneurship, ensures business succession, minimizes risk for primary banks, and strengthens the regional economy. By supporting start-ups and business succession, the program contributes to economic development in the regions and increases the competitiveness of German companies. Guarantee banks play a central role in this process by facilitating lending and promoting the financial viability of projects.
