Federal and State Guarantees

The German federal and state guarantee system supports commercial enterprises that are predominantly privately owned, as well as startups and small and medium-sized enterprises (SMEs) that cannot provide sufficient standard bank collateral for investment and working capital loans. The program aims to enable the financing of viable concepts and strengthen Germany's economic structure.

The federal and state guarantee system serves to secure investment and working capital loans for commercial enterprises. It aims to enable the financing of projects that would otherwise not be feasible due to a lack of collateral, and can also be combined with other funding instruments.

The guarantee system offers guarantees as a financial instrument to secure bank loans for businesses. The guarantees cover up to 80 percent of the default risk, with the amount of the guarantee depending on the need and the competent authority, ranging from 2 million Euros for SMEs to 20 million Euros for large guarantees in specific regions.

Specific conditions apply to the use of guarantees, including the economic viability of the business concept and compliance with EU state aid law. Adequate equity participation by investors is also required.

The application for guarantees depends on the guarantee amount and type of guarantee, and is submitted via different contact points, primarily the primary bank (Hausbank) or directly to competent authorities such as guarantee banks or PricewaterhouseCoopers GmbH for large guarantees.

The legal basis for the federal and state guarantee system is a guideline, information for which is provided by the Federal Ministry for Economic Affairs and Climate Action (BMWK). It is also subject to EU state aid law.