What are the steps to take to receive KFW liquidity assistance during the coronavirus crisis?

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The approval and disbursement of loans from the KfW Special Programme for Corona Liquidity Assistance is subject to various conditions. FIDES gives you the following five recommendations on how to improve your chances of success when applying for a loan.

1. PROVIDE EVIDENCE THAT YOUR FINANCIAL DIFFICULTIES ARE A DIRECT RESULT OF THE CORONA CRISIS

Liquidity assistance under the KfW Special Programme is available to those enterprises that were not enterprises in economic difficulties as defined by the European Union (Regulation EU No 651/2014) as at 31 December 2019. More specifically, this means, for example:

the company was in stable and orderly financial condition as at 31 December 2019,
the house bank or syndicate bank were not aware of any unregulated payment arrears of the applicant of more than 30 days,
there were no indications of a loss of creditworthiness, e.g. indications of material breaches of covenants (breaches of contractually agreed obligations of the borrower)

Use your correspondence with your house bank to prove that in the past you have delivered on time the contractually agreed evaluations such as monthly BWA, planning calculations, liquidity planning and comments on the target/actual deviations. If this has not been the case, draw up a concrete timetable for making your control systems future-proof as quickly as possible and explain the implementation steps to be taken by your house bank.

2. PRESENT PLAUSIBLE FIGURES SHOWING THAT YOUR FINANCING DIFFICULTIES ARE TEMPORARY

A precondition for the granting of a loan under the KfW Special Programme 2020 is that the financing difficulties are temporary and caused by the coronavirus crisis. Submit a liquidity plan to your house bank or savings bank that shows that under the economic conditions which prevailed before the coronavirus pandemic the financing of the company would be secured. Create three scenarios: A plan on how the course of business would have been without the coronavirus, how the course of business developed during the coronavirus crisis and how it is expected to continue after the coronavirus crisis.

3. DETERMINE THE AMOUNT OF CREDIT YOUR COMPANY NEEDS

Based on the scenarios, calculate how much liquidity you need to cover your running costs. When planning the scenarios, you must also include other financial aid already promised by the federal government, such as the assumption of short-time working benefits and tax deferrals.

4. ESTABLISH INTEGRATED FINANCIAL PLANNING

In order to demonstrate the ability to service the capital up to the end of the credit period, you should submit to the bank an integrated P&L, balance sheet and financial plan up to the year 2025.

5. SIMPLIFIED PREMISES AND SCENARIO CALCULATIONS

Due to the worldwide spread of the coronavirus crisis and the resulting uncertainties in economic development, planning will currently only be possible on the basis of past values and based on simplified assumptions. In order to estimate bandwidths, several realistic scenarios should be calculated.