• New ERP digitisation and innovation loan available as a source of low-interest financing from 1 July
• Introduction of the ERP Mezzanine Financing for Innovations programme for the long-term financing of research and development
• Guarantees from the European Fund for Strategic Investment (ESFI) simplify lending
• More favourable terms thanks to funds from the ERP and the federal budget

From 1 July 2017, KfW will be providing targeted support for the digital transformation and for innovation in SMEs through a range of new funding programmes. Studies by KfW Research show that a large proportion of SMEs in Germany are not even close to harnessing the full potential of digitisation. The share of innovative companies has recently hit bottom.

The new ERP Digitisation and Innovation Loan is available for financing digitisation and innovation projects in a broad range of areas. Support is provided for the digitisation of products, production processes and procedures, such as the networking of production systems using Industrie 4.0 technologies. Measures to develop corporate strategy and/or organisation to incorporate digital technologies are also eligible for loan support. Financing is additionally available for innovation projects whereby companies develop new or substantially improved products, processes or services. The programme is open to all companies that are considered ‘innovative’ within the meaning of the European Union’s Horizon 2020 programme. This includes fast-growing companies and companies with particularly high expenditure on research and development.

A key feature of the funding is an optional liability release of 70% for loans granted to companies with fewer than 500 employees. KfW can take on a large proportion of the risk of default, making it easier for the banks to issue loans. Using resources from the European Fund for Strategic Investment (EFSI), the European Investment Fund (EIF) provides a guarantee from the InnovFin SME Guarantee Facility, which is part of the European Union’s Horizon 2020 programme. The aim of EFSI is to promote the financing and implementation of productive investments in the European Union and to ensure better access to financing. Thanks to support from the European Union, KfW can even offer attractive terms to companies with a weak credit rating. The loan terms for small and medium-sized enterprises (in accordance with EU definition) are also more favourable.

KfW has also set up a second, new instrument – the ERP Mezzanine Financing for Innovation. This provides financing packages consisting of debt capital and subordinated loans for finance market-oriented research and development for new products, procedures, processes or services as well as important advancement work. The programme even supports projects that are brand new for the company, as well as projects that go beyond the state of the art in technology in the EU.

Both programmes are geared at established commercial companies and freelancers in Germany with an annual group turnover of up to €500 million. The terms offered are more favourable thanks to funds from the ERP and the federal budget.

Speaking about innovation and the new funds, Federal Minister for Economic Affairs and Energy, Brigitte Zypries, said: “Digitisation is the key to successfully generating value in the 21st century. We want to support the innovative capacity of our SMEs. Only SMEs that are innovative and in step with the most current developments will be able to face global economic challenges. We have tabled our innovation agenda, which is based on this notion. We want to use it to improve technology-neutral support for innovation. I am delighted that KfW is offering new ERP programmes to support innovation and digitisation in German SMEs.”

Dr Ingrid Hengster, Member of the Executive Board of KfW, said: “Digitisation is a decisive factor in the successful transformation of business – the speed and depth of which we are not able to fully anticipate. What’s clear, though, is that companies need to constructively embrace digitisation and be innovative if they want to stay competitive. The majority of SMEs are still not doing enough in this area. The new approaches to funding have been designed to give greater focus to digitisation and innovation.”

Contact in the Federal Ministry for Economic Affairs and Energy:

Philipp Jornitz
Federal Ministry for Economic Affairs and Energy
Press Office
Scharnhorststr. 34-37, 10115 Berlin
Tel: +49 (30) 18615-6133
Email: Philipp.Jornitz@bmwk.bund.de
Website: www.bmwi.de

Contact at KfW:

Wolfram Schweickhardt
KfW Banking Group
Corporate Communication
Palmengartenstraße 5-9, 60325 Frankfurt am Main
Tel.: +49 (0)69 7431-1778
Fax: +49 (0)69 7431-3266
Email: Wolfram.Schweickhardt@kfw.de
Website: www.kfw.de