No loan despite low interest rates: Banks are risk-averse when lending to startups. 36 percent of young IT companies have difficulty obtaining a loan. Bitkom based on the KfW business survey 2016.
Banks' willingness to grant loans is directly related to a company's revenue. Thirty-five percent of all IT companies surveyed with less than €1 million in revenue reported difficulties obtaining loans. This drops to just 20 percent for companies with annual revenues of €1 million to €10 million, and only 11 percent for companies with revenues of €10 million to €50 million. All surveyed companies with annual revenues of more than €50 million have no difficulty obtaining loans.
"Startups can only benefit to a very limited extent from the favorable credit conditions on the capital market. Often they are simply unable to provide the required collateral,"
says Bitkom Managing Director Niklas Veltkamp.
“It is important that we create sufficient alternative financing options for startups in Germany.”
Veltkamp therefore welcomes the Plans by the Federal Ministry of Finance to establish a so-called “Tech Growth Fund” with a volume of 10 billion euros:
“What is crucial now is what the exact conditions for the fund will be – and when it will actually be launched.”
Public support: LfA Förderbank grants more loans to startups
Against this backdrop, support for start-ups by public authorities is all the more important. For example, the LfA Förderbank, the state-owned specialist bank for the promotion of small and medium-sized businesses in Bavaria, increased its development loans by 2.6 percent in the first half of 2016 compared to the same period last year. Around 2,200 medium-sized enterprises and almost 90 municipalities in the Free State received approximately €812 million in development loans. A quarter of the development loan volume, or almost €200 million, was allocated to start-up support for young entrepreneurs.
"With the LfA, we are strengthening small and medium-sized businesses and making Bavaria a state of startups. The LfA has already supported more than 800 young ideas with almost 200 million euros this year. And established small and medium-sized businesses have also benefited from the LfA's attractive funding program. These companies have been able to secure over 61,000 jobs in the Free State and create around 2,100 new ones,"
said Bavaria’s Minister of Economic Affairs and LfA Chairwoman Ilse Aigner.
