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The application for assistance requires good preparation

In a very short time, the corona crisis has put companies in a situation where their survival and the jobs of their employees are directly threatened.

The crisis is impacting companies across all industries and from start-ups to large corporations. The liquidity situation of the affected companies is extremely tight.

Against this background, the Federal Government and the individual federal-state governments have adopted or announced extensive packages of measures.

Among many other measures, the existing KfW loan programmes have been expanded. These loans are granted in the so-called house bank procedure. This means that corresponding loan applications must be submitted to banks and savings banks. Companies which were ‘not in difficulty’ before 31 December 2019 may submit applications for assistance from 23 March 2020.

The current criticism of the programme set up by the Federal Government is mainly directed against the planned liability participation by banks, for instance, at a rate of 20%. This could become a serious obstacle to lending because it leaves banks with a substantial credit risk and they must therefore currently comply with the relevant credit assessment processes. This means that loan disbursement is not expected before mid to end of April. This also presupposes that the banks will be able to maintain appropriate personnel capacities in the event of an increasing number of loan applications during the corona epidemic.

In order to avoid unnecessary delays in the loan approval process, it is important for companies to be well-prepared before submitting their loan applications. This means, in particular, having information or documents available which should be submitted to banks and savings banks together with the loan application.

This should include the following:

  • In addition to the 2018 financial statements, the banks will require a business assessment and/or provisional financial statements for 2019. If possible, an income statement/business assessment for the current year 2020 should also be provided.
  • The current liquidity status (bank history) should be presented in detail.
  • An explanation of the loan requirements due to the corona crisis will also be necessary.
  • A description of the measures introduced or planned so far with regard to cost reduction and working capital management should be available. It should also be documented whether applications for short-time benefits, tax deferral and/or reduction of tax advances have been submitted.
  • The description of the measures initiated or planned so far should also include a presentation of possible liquidity contributions by shareholders.
  • A detailed liquidity statement for up to 12 months is essential. This liquidity statement should take into account the impact of the measures introduced or planned so far, as mentioned above. Since a look into the future is subject to great uncertainty in the current situation, several alternative scenarios should be developed with regard to future liquidity requirements.
  • According to the website of Bürgschaftsbank NORDRHEIN-WESTFALEN, a profitability calculation will also be necessary for the years 2020 and 2021.
  • In order to obtain a federal-state guarantee in North Rhine-Westphalia, a comprehensive catalogue of annexes must still be attached to an application.

For many small and medium-sized enterprises, for example, preparing a detailed liquidity calculation or corporate planning will be a challenge, especially against the background of current planning uncertainties, because these companies have not prepared correspondingly detailed calculations in the past and the necessary processes for this are not yet in place.

However, a detailed liquidity statement, in particular, will lead to greater transparency with regard to the future liquidity requirements of companies and hence also increase the quality of the basis for decision-making with regard to measures yet to be taken.

Companies planning to take advantage of KfW loan programmes, for instance, should also check whether additional borrowing could lead to a breach of covenant provisions in existing loan agreements. In this case, the consent (waiver) of the present financing partners may have to be obtained in advance.

This article was written in cooperation with the following colleagues:

Gerd Norta, Public Accountant, Tax Advisor in Duisburg ( / +49 203 30001 266)

Thorsten Kluge from Braunschweig ( / +49 531 2403 302)


For more information, go to:

Corona crisis – First aid from PKF

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