Frankfurt Harald K. needs a corona loan. But so far the freight forwarder from southern Germany has not even been advised by one of his three long-standing banks. One – a supraregional institute – found that it did not make enough turnover with him to be his house bank. The other – a savings bank – first handed K. a number of forms that confused him and made him feel put off. K. only found a contact person who would explain his options to the Fincompare financing platform.
“What I had hoped for from my house banks – advice – I found first at an internet bank,” says the entrepreneur angrily. In the coming days he wants to approach his house banks again.
So far, his state’s emergency aid has kept him afloat. He still doesn’t have a loan, but feels better prepared for his next visit to his banks.
The example of the forwarder from southern Germany may be a special case. But it is a piece of the puzzle that can explain why the weekly demand for KfW loans is still relatively high among small companies in particular – and why fewer companies have applied for such loans than one might suspect.
A study by Barkow Consulting and Fincompare, which is available exclusively to the Handelsblatt, shows: only every 100th company has applied for a KfW loan.
KfW applications over 53 billion euros
The state development bank has applied for funds totaling 53 billion euros since the start of the programs, but these are only spread over a good 80,000 applications. The lion’s share of the sum goes to relatively large companies: around 1.4 percent of all applications made account for around 58 percent of the total.
With the aid programs launched in March, the development bank wants to support companies that have run into liquidity problems simply because of the corona crisis. In return, the state bank relieves the house banks of these companies from the majority of the default risk.
It seems particularly difficult for customers who do not have close contact with a bank. “Our impression is that the banks are hesitant. On the one hand because their risk appetite has decreased, on the other hand because they concentrate heavily on their existing customers. Some institutes have signaled to us that they will not be open to new customers until the middle or end of August, ”reports Timmwege, who is responsible for contact with banks and financing partners in the Fincompare management team. The company is a digital platform that arranges financing for small and medium-sized companies.
The need is still great, especially in small companies. A survey of Fincompare’s 30,000 corporate customers came to the result that more than seven out of ten companies have a need for subsidies due to the corona crisis. “Especially companies with a turnover of up to five million euros and ten to 50 employees are currently often neglected,” says Fincompare Managerwege.
Steady stream of applications from the little ones
Above all, loan applications with a maximum volume of three million euros ensure a steady stream of applications at KfW. On average, demand in July – despite the holiday season – was still a third of the average in May, the liveliest month to date. For the larger loans, the July value is around a fifth of the May level. The quick loan, for which the state is fully liable, is still a big hit – very few small businesses can even apply for it.
Because the prerequisite for this loan, which can be a maximum of 800,000 euros, is – unlike the other Corona loans from KfW – at least eleven employees. “Almost 90 percent of German companies and self-employed people just don’t meet this criterion,” says study author Peter Barkow.
Because of the 7.5 million companies in Germany, 6.6 million have a maximum of ten employees. The introduction of the quick loan was controversial. Since the banks only have to check a few key figures before they apply for this auxiliary loan, the default risk is considered to be above average.
But the need is there: The monthly growth rate for the quick loan was 14 percent in July. This value was only exceeded by the “normal” KfW Corona loans of a maximum of EUR 800,000 at 15 percent. In the case of larger companies, on the other hand, demand has fallen dramatically.
Mini quick loan in Bavaria
A look at Bavaria also gives an idea of how great the interest of small companies would be in KfW quick loans. In the state, the state government introduced a kind of mini quick loan at the beginning of May, which companies with up to ten employees can apply for from the Bavarian development bank LfA. The LfA thus closed exactly the gap that exists in the KfW program. By July 24, 3,300 companies had applied for such a loan. Total volume of the instrument: so far 140 million euros.
“The demand figures show that the LfA succeeds in quickly and reliably supplying small businesses, sole proprietorships and freelancers with the necessary liquidity with the quick loan,” says a spokesman for the development bank. The introduction of the LfA express loan has “proven itself”.
The 3300 applications for the Bavarian mini quick loan correspond to a quarter of all KfW loans applied for in Bavaria, Barkow has calculated. Applied to the whole of Germany, this would correspond to 20,000 applications with a volume of 850 million euros, which are missing due to the size restrictions.
This sum could easily be raised by KfW. In the course of the Corona aid packages, the federal government more than doubled the lending capacity of the funding agency to around one trillion euros a few months ago.
However, the benefits of quick loans are controversial among bankers. At the Volksbank in Ortenau, for example, just under 13 percent of all loans granted between March and June came from KfW programs or other corona aid. The quick loan accounted for only twelve percent of this.
On the one hand, this is due to the fact that the interest rates for quick loans are three times as high as for normal KfW aid – the state can be reimbursed for its higher risk. “On the other hand, banks are prepared to take risks with customers with a sustainable business model and keep the interest costs of these customers low,” says CEO Markus Dauber.
Debate about quick loans
At Gladbacher Bank, too, liability did not play a role in the credit decision. “If even the house bank doesn’t want to take on its own risk of ten or twenty percent, then KfW should ask itself whether it really wants to take on 100 percent as a substitute,” says CEO Hans-Peter Ulepic.
The banks are deliberately not lending to all customers. “We couldn’t help in around three to five percent of the cases,” emphasizes Ulepic. “We also said that to customers who overburdened the potential burdens from interest payments and repayments. After all, entrepreneurs are also liable with private assets and have to consider whether it is better to downsize or quit. Anything else helps neither the customer nor the KfW. “
The Gladbacher Bank even financed customers who fell through the KfW grid – such as companies that are classified as “companies in difficulty” according to the strict EU guidelines and are therefore not allowed to receive state aid. “Then we usually found a solution from our own resources,” says Ulepic.
However, this is by no means the case with all banks, says Fincompare Managerwege. According to him, many applications were rejected because customers violated EU requirements. “This often also applies to companies that would actually be able to survive. I’m surprised how many fail. ”Despite these restrictions, KfW loans will remain important for companies for a long time to come. “I could imagine that the demand for subsidies will rise again in autumn. Smaller companies in particular do not necessarily have to plan their liquidity over several years, ”he says.
New wave of applications in autumn?
He is thus more pessimistic than KfW and many banks. “We are currently not seeing a second wave of applications. The companies have made their liquidity planning for different scenarios and secured liquidity accordingly, ”says Christian-Hauke Burkhardt, the funding expert at German bank. “A sharp increase in corona cases or a further lockdown could also change the scenario.”
KfW itself sees it similarly. “As long as the pandemic remains under control, I am not assuming a second wave of applications. After all, many medium-sized companies are also adjusting to the new circumstances, ”says the chief economist of the development bank, Fritzi Köhler-Geib. According to a KfW survey, almost half of the companies have already adapted their business model or product range.
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