Corona aid fund guarantee awards: responsibilities and guidelines

Since the outbreak of the corona pandemic, measures have been taken worldwide to contain the disease. Many companies have suffered severe financial losses. To minimize the damage, Germany has established a Corona Relief Fund. This allows companies to apply for loans and guarantees.

Because demand for financial assistance is high, it is critical that guarantees are awarded effectively and equitably. This article examines the responsibilities and guidelines for issuing guarantees from the Corona Assistance Fund.

It is important to understand who is responsible for guarantee decisions. The fund is managed by the state bank KfW. It is the central issuing agency and works closely with the house banks to ensure that guarantees are issued to businesses that need them most urgently. However, the house banks ultimately decide on the loan and guarantee applications of the companies.

In order to receive a guarantee, companies must meet certain criteria. A key criterion is a plausible prospect of economic recovery. Here, the company is required to submit a realistic forecast of a successful economic resumption in the future business development. It is therefore important that companies carefully plan their finances and prospects in order to obtain a positive decision.

Issuing guarantees from the Corona Assistance Fund is a complex process that involves balancing the needs of businesses with available resources. The purpose of this article is to provide insight into the guidelines and responsibilities in order to make the decision-making process more transparent and to help companies apply for guarantees.

The Corona aid fund: guidelines for issuing guarantees

In response to the economic impact of the COVID-19 pandemic, the German government has established a Corona Aid Fund. The fund is intended to provide financial assistance to companies and self-employed persons affected by the pandemic.

Under the relief fund, companies and self-employed individuals can apply for guarantees to improve their liquidity and maintain their operations. However, certain guidelines and requirements for guaranteeing apply.

• The company or self-employed person must be based in Germany
• The business or self-employed person may not have already been sold before 31. December 2019 to have been insolvent
• The company or self-employed person must be able to repay the guarantee costs

In addition, businesses and self-employed individuals must submit a self-declaration confirming that they have been affected by the pandemic and that they have no other sources of funding.

The guarantees are issued by KfW (Kreditanstalt fur Wiederaufbau), which acts on behalf of the German Federal Ministry of Economics and Technology. KfW reserves the right to conduct an individual credit assessment and may refuse guarantees if the requirements are not met.

Guidelines for the issuance of guarantees from the Corona Assistance Fund

During the current COVID-19 pandemic, many companies and industries around the world have been hit hard with business closures and restrictions on public life. In order to help the affected companies and preserve jobs, many governments have set up support programs in the form of loans and guarantees.

In Germany, a Corona aid fund has been set up from which guarantees for loans can be issued. However, there are certain guidelines that must be considered when issuing these guarantees.

• Guarantees will only be issued to companies affected by the impact of the COVID-19 pandemic.
• Companies must disclose their financial condition and demonstrate that they were economically sound prior to the crisis.
• The guarantees may only be used for investments and running costs that are important for the business operation.
• The guarantees are limited in time and must usually be repaid within five years.

It is important to emphasize that the responsibility for repayment of the loans lies with the companies receiving the guarantees. The guarantees are intended only as a support and not as a permanent solution to economic problems.