How to do Business in NRW: Incentives Programs in Germany

Public Guarantees

Why Using Public Guarantees

New companies often experience difficulties securing financing through the capital markets as, frequently, the required loans can only be collateralized to an insufficient degree. In these cases – with economically appropriate projects – public guarantees can replace or supplement any shortfall in securities.

How Public Guarantees Work

A public guarantee is a financial instrument that encourages financial institutions, i.e. commercial banks but also public banks, to offer loans to new companies. Guarantee programs are specially designed to help entrepreneurs obtain bank financing by dealing with the collateral constraint. However, guarantees do not provide cash support or any kind of credit.

The guarantee functions as a promise by the guarantor to the lender that, in the event that the borrower defaults on payment, the guarantor will repay the lender a specified proportion of the foregone principal. In other words, guarantees will be given by a guarantor to pay all or part of the loan in the case of borrower payment default.

Different Public Guarantee Programs

Different types of public guarantee programs exist to support different types of investment projects within Germany. The guarantee program depends on the required amount, the size of the enterprise, and the investment region.

Generally speaking, public guarantees are accessible for financing of an investment project or for working capital loans.

The maturity is generally 15 years, or eight years for working capital loans. Commitments vouched for within public guarantees are normally subject to intensive individual examination by external assessors. Guarantee fees are paid annually.

The fee paid is a percentage of the actual guaranteed amount at the beginning of the year concerned. This is fixed over the whole duration of the loan.

Guarantee programs are avaiable via a federal state‘s guarantee banks, via the individual state government or via the individual state government together with the federal government.

NRW.BANK Development Programs

NRW.BANK offers a wide range of financial support for business start-ups and to ensure company survival: investment grants, subordinated loans, venture capital, and releases from liability.

NRW.BANK Start-Up Loan: Business founders can be supported with loans ranging from EUR 25,000 to EUR 10 million. The financing portion may amount to up to 100 percent of the eligible investment costs or working capital. The acquisition of land and buildings as well as furniture and fixtures and the takeover of existing SMEs are also eligible for funding. The NRW.BANK start-up loan is offered with terms of five, ten or twenty years. The start-up loan includes an optional indemnity bond from the Bürgschaftsbank NRW, for which business founders may apply as part of a standardized process.

NRW.BANK SME Loan: This is a low-interest loan from NRW.BANK to finance small and medium-sized enterprises, and independent professionals. The NRW.BANK SME Loan is available as both an investment loan and a working capital loan. The amount of the loan can range from EUR 25,000 to EUR 10 million. This promotion program is offered jointly by NRW.BANK and KfW.

Advice Center Rhineland
Kavalleriestraße 22
40213 Düsseldorf, Germany
Phone: +49 211 91741-4800
Fax: +49 211 91741-7832

Branch Office of NRW.BANK in Münster
Advice Center Westphalia
Friedrichstraße 1
48145 Münster, Germany
Phone: +49 251 91741-0
Fax: +49  251 91741-2921


Feel free to contact us if you have any questions

NRW.Global Business GmbH
Trade & Investment Agency of the German State of North Rhine-Westphalia (NRW)
Völklinger Str. 4
40219 Düsseldorf