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How to Start-up during Covid-19

Dear Start-up Friends,

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. 

For established Berlin start-ups

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

Deadline extension for taxes and contributions

a. Check local IHK for information provided from your council

b. Extension of the deadline for social security contributions

  • applications to all health insurance companies 
  • only for cases of hardship
  • there is no process for it (yet)

c. Tax relief and deferral

  • check local agreement, which is different for each state (click here for Berlin)
  • Application for relief and interest-free deferral to the tax office (template for Berlin can be found on this website, but can certainly also be used for other federal states). This is particularly important for 
  1. Prepayment of income tax and corporate income tax (Einkommensteuer- und Körperschaftsteuer)
  2. trade tax (Gewerbesteuer) 
  3. value-added tax (Umsatzsteuer)

For long term loans

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.)

b. Unternehmerkredit: for small to medium size companies and freelancers who have been on the market for at least 5 years (exclusion list)

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.

Short-time work compensation

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. 

  1. Measures for start-ups in early stage or without venture capitalists
  2. Measures for start-ups with venture capitalists - a "matching fund"
  3. Measures for scale-ups
  4. Measures for a secondary market for defaulting investors

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. 

Your CANDIS-Team.


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