We hope the following article helps you to financially secure your company during Covid-19. Before reading this, please be aware that CANDIS develops financial workflows, but we are not a major bank or a consulting firm. Just like the majority of companies in Germany and abroad, we are a start-up enduring the same consequences caused by COVID-19. Right now it is more important than ever, that we support each other. In that spirit, we would like to share our knowledge and experience with you. Please feel free to contribute your different experience to the conversation.
Generally speaking, even if liquidity looks good at the moment, get prepared. No one knows the extent to which long-term consequences of the situation would affect the start-up sector. Especially because start-up companies have not yet received much attention in all the rescue packages and most traditional financing channels are closed to start-ups. At the moment, no one knows how long the bureaucracy takes to process the mass of applications and when how long it takes until the financial bottleneck is overcome.
Below you will find some steps that we consider useful in the current situation. Some might help you, too.
a. Short term loan IBB
b. Small to medium size business (according to definition of a KMU) existing for longer than 3 years
c. Interest-free rescue aid up to EUR 0,5 million, in exceptional cases up to EUR 2,5 million (4,0 % p.a.)
d. Here is a checklist for you to verify if your start-up fits the program
a. Check local IHK for information provided from your council
b. Extension of the deadline for social security contributions
c. Tax relief and deferral
a. Federal aid of KfW (In order to receive the aid you will need support from your principal bank. Check with them to see if they will support you.)
c. Gründerkredit: up to 5 years after company foundation, up to 50 employees
d. (Kredit für Wachstum: domestic and foreign firms, for businesses up to 5 billion € revenues/year)
The KfW pushlishes new information daily. In order to get the loan you may may be dependent on support from guarantee banks, which have now lifted the guarantee ceiling to 2,5 Mio. EUR.
As this topic is complex and has undergone regulatory changes in the past few weeks, please contact legal advice.
At the moment the KfW and the Start-up-Association are working together to offer more specific options for start-up companies. Hopefully, further information will be published soon. At this point a Four-Step-Plan was presented.
The plan sounds promising and could offer the rescue package that start-ups were asking for. In the following weeks we will find out what will be implemented. Until then, stay healthy and safe.