Berlin The Ministry of Economic Affairs and the Ministry of Finance have agreed to make it easier for German medium-sized companies to do business with other countries with the help of loan guarantees. This emerges from a joint paper by the two ministries, which is available to the Handelsblatt.
“With the new instrument, we are helping small and medium-sized companies to use their full potential in foreign business,” said State Secretary for Economic Affairs Franziska Brantner (Greens). According to Brantner, the new guarantees would help the German economy expose itself to less geopolitical risk by spreading the buyers of its exports more widely.
Finance State Secretary Florian Toncar (FDP) added: “This offer finally closes a gap that has been known for years.” For years, the economy has been citing the lack of guarantees as a major obstacle to exports. The topic was already being discussed in the grand coalition, but the problem was not resolved, partly because of the legal complexity.
Especially in the crisis it is needed for the middle class Signals like this, Toncar said. Specifically, the ministries want to introduce new guarantees for exports by German medium-sized companies up to an order value of ten million euros by the end of the second quarter.
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Have the loan secured by the state via a Hermes guarantee
It works like this: If a German company sells goods abroad, the buyer often does not pay his bill directly. Instead, the German seller sets a deadline by which he must have paid for his goods.
Formally, the German seller grants the buyer a loan. Companies can already have this loan secured by the state via a so-called Hermes guarantee in the event that the buyer does not pay. However, the Hermes guarantee only applies if the buyer really does not pay.
Usually it only takes a little while until the buyer pays. In the meantime, however, the German company must remain liquid. It therefore sells the loan claim to a bank immediately after the export transaction has been completed.
The entrepreneur gets his money straight from the bank. The bank demands the money from the foreign buyer. This procedure is common in larger companies. In the case of medium-sized companies, however, the risk of buying up the loan is often too great for the banks.
If the foreign buyer cannot pay, they are stuck with the loss. Because there is often less information about medium-sized companies and their business partners than about large companies or because the effort is too high, banks shy away.
This is an obstacle for medium-sized companies because they cannot then do the export business in order not to endanger their liquidity. That is why the federal government is now stepping in, and the economics and finance ministries want to introduce a “forfaiting guarantee”: The banks are taken away from the risk of buying credit, with the state stepping in if the foreign buyer defaults on payment.
The state guarantee covers 80 percent of the loan
The ministries have agreed that the state guarantee for the banks should cover 80 percent of the loan. 20 percent of the risk remains with the bank so that it does not buy every export credit without further examination.
With the new instrument, we are helping small and medium-sized companies to use their full potential in international business. Green politician Franziska Brantner
In addition, the banks always pay a premium to the federal government for issuing the guarantee. “The financial risks are limited and the state also charges a fee for this, so that the opportunities clearly outweigh the risks,” explained Toncar.
Because it first has to be determined how much risk the state is taking on with the new guarantee instrument, the “forfaiting guarantee” will first be tested in a three-year pilot phase, for which the federal government will provide a total of 250 million euros for the guarantees.
With the new guarantees, the federal government is implementing a project from the coalition agreement. Reinhard Houben, spokesman for economic policy FDPnow speaks of “very good news for medium-sized companies”.
Especially in view of the energy crisis and inflation, this is the right signal for the important export economy. “In this way, entrepreneurs can secure the necessary liquidity in an environment that is becoming more difficult.”