KfW Innovation Loan for Scaling to Series Production

The company finances the scale-up with a low-interest KfW loan tailored to innovation projects. The loan covers the production equipment and the investment needed to reach series production, with long-term, favourable conditions that ease the cash-flow burden until the product generates returns. On a scale-up of this size, the financing volume comes to about €12 million. As debt rather than a grant, it leaves the company's ownership intact.

A KfW loan is applied for through the company's own bank rather than directly at KfW, the so-called house-bank principle. The company discusses the project with its bank, which forwards the application to KfW and passes on the favourable conditions. The loans run for up to ten years with up to two repayment-free start years and an interest rate fixed for the whole term. The interest subsidy and the grant supplement are state aid: if the company combines the loan with a grant, the same costs may only be funded up to the state-aid ceiling, and a loan can often be combined with grant funding on a different part of the project. The decisive advantages over ordinary borrowing are the rate, the term and the grace period, which together match the slow payback of an innovation or digitalisation investment. For a project that is past the stage where grants typically apply, this combination is often the difference between proceeding now and waiting for internal cash to build up.

Scaling an innovation to series production is usually past the point where grants apply, but a low-interest KfW loan provides the capital on favourable terms while the company keeps full ownership. For a company at this stage, it is often the decisive instrument.

More on KfW innovation loan: The guide KfW innovation loan: terms and application explains the programme step by step. How we support your project is covered under KfW innovation loan consulting.