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KfW innovation loans: financing growth.

The KfW innovation loans finance innovation and R&D projects with low-interest, long-term credit rather than a grant. Since July 2025 they run as the ERP-Förderkredit Innovation, with a sibling programme for digitalisation, and the terms improve the more ambitious your project is.

Last updated: 24 September 2026 · Help with your application: KfW innovation loan consulting

At a glance

Low-interest promotional loan from KfW, applied for through your principal bank (Hausbank).
Restructured on 1 July 2025: ERP-Förderkredit Innovation (513, 514) and ERP-Förderkredit Digitalisierung (511, 512), replacing the former programmes 380 and 360/361/364.
Up to €7.5 million at the Basis stage, up to €25 million per project at LevelUp and HighEnd; there is no minimum loan amount.
Term of 2 to 10 years with at most 2 repayment-free years (at most 1 for terms up to 5 years), interest fixed for the whole term; KfW publishes the rate daily per funding stage and price class.
Three funding levels (Basis, LevelUp, HighEnd): the higher the level, the more KfW subsidises the rate; from LevelUp there is an ERP grant supplement of 3 or 5% of the loan, at most €200,000.
A loan, not a grant: it has to be repaid, but at subsidised conditions.

1. What are the KfW innovation loans?

The nature of the instrument and how it differs from the grants in this overview.

Unlike the grants and the tax incentive elsewhere in this overview, the KfW innovation loans provide financing, not a non-repayable subsidy. KfW, on behalf of the economics ministry, offers subsidised loans for innovative companies and innovation projects. The benefit lies in the favourable interest rate, the long term, the repayment-free start years, and, for more ambitious projects, an additional grant supplement on top of the loan. They are designed for companies that need capital to carry an innovation or R&D project through to implementation.

2. Innovation versus digitalisation

The two sibling programmes and which one fits your project.

KfW splits the offer into two programmes:

ERP-Förderkredit Innovation (513, 514): for innovation projects of every depth, from simple product, process, or service improvements to full R&D projects and their implementation. Innovations in marketing, organisation, and business models also qualify. It funds both investments and ongoing costs. This is the right fit when you develop something genuinely new, for example training your own AI model or designing a new architecture.
ERP-Förderkredit Digitalisierung (511, 512): for digitalisation projects such as new hardware and software, digital business models, IT security, staff training, and the use of future technologies including AI. This is the right fit for "buy and implement" projects such as a cloud migration or an ERP modernisation.

Each programme is awarded in three levels (Basis, LevelUp, HighEnd). The conditions improve with each level, so the higher the innovation or digital-maturity gain of your project, the more attractive the interest rate and grant supplement.

3. Who can apply

The broad eligibility and the size ceiling.

Eligible applicants are commercial companies, sole traders, and freelancers that are majority privately owned, with a group annual turnover of up to €500 million, and a seat in Germany (or abroad with a German subsidiary, branch, or establishment). The variants with risk assumption (512, 514), where KfW and the principal bank share half the liability each, require at least two annual financial statements.

4. What is funded and the terms

The cost scope, the loan ceiling, and the optional grant supplement.

The loans fund investments and ongoing project costs. The maximum is €7.5 million at the Basis stage and €25 million per project at LevelUp and HighEnd; there is no minimum loan amount. The grant supplement (Förderzuschuss) of 3% (LevelUp) or 5% (HighEnd) of the disbursed loan, at most €200,000, can be applied for together with the loan; it is granted under the de minimis regulation. The loans can be structured as aid-free, under the de minimis regulation, under Article 17 GBER, or, in the higher levels of the innovation loan, under Article 25 GBER.

5. How to apply and timing

The principal-bank route and the timing rule that protects your eligibility.

You apply through your principal bank or another financing partner, which passes the application to KfW, before the project begins. KfW does not refinance projects that have already started.

6. How it compares

When a loan is the better tool than a grant or the tax incentive.

A loan suits companies that have a bankable project and want capital on good terms, especially when grant programmes do not fit the project type or timing. It can be combined with the Forschungszulage and with grants, subject to the rule that the same costs are not funded twice and that total aid stays within EU state-aid limits. Where you simply want a share of your R&D personnel costs back without taking on debt, the Forschungszulage is usually the simpler route; the KfW loan is the tool when you need to finance the whole project.

7. The terms in detail

A KfW loan is repaid, but the promotional benefit sits in the terms.

These are loans, not grants: you repay the principal, but on terms a commercial bank rarely matches. The interest rate is subsidised and capped under a published maximum for your price class; KfW can finance up to 100% of eligible costs and disburses the full amount with no up-front deduction. Amounts run up to €7.5 million at the Basis stage and €25 million at LevelUp and HighEnd, with terms of 2 to 10 years, at most two grace years during which you repay no principal, and interest fixed for the whole term. The rate is never published as a single number: KfW uses a risk-adjusted interest system, so your bank maps your creditworthiness and collateral to a KfW price class with a maximum rate.

8. The Hausbank route and liability release

You apply through your own bank, and KfW can take part of the risk off its books.

KfW lends through the Hausbankprinzip: you do not apply to KfW directly but through your own bank (Hausbank), which forwards the application, and always before the project starts; there is no retroactive financing. KfW's most underappreciated lever is the liability release (Haftungsfreistellung): in the KfW innovation loan (514) and the digitalisation loan (512), KfW optionally takes 50% of the bank's default risk; at least two sets of annual accounts are required. This makes a bank willing to lend even to thinly-collateralised companies. The borrower remains fully liable for repayment.

9. Who can apply

A programme for each stage of the business lifecycle.

The KfW innovation loan is open to commercial enterprises, sole proprietors and freelancers that are majority privately owned with a group turnover of at most €500 million, SMEs and larger Mittelstand firms alike. Without an innovation or digitalisation project, the ERP-Förderkredit KMU (365/366) or the KfW-Förderkredit großer Mittelstand (375/376) usually fits better; founders have dedicated programmes such as the ERP-Gründerkredit StartGeld. The interest subsidy is available aid-free, under the de minimis regulation or under the GBER.

10. Common mistakes and FAQ

The errors that cost applicants, and quick answers.

Starting the project, or signing the loan, before applying through the Hausbank, which forfeits the financing.
Approaching KfW directly instead of through your own bank.
Expecting one published interest rate: it is set per borrower through the risk-adjusted system.
Treating the loan as a grant: it is repaid, with the benefit in the terms.

Is a KfW innovation loan a grant? No, it is a loan, not a grant. The promotional benefit lies in subsidised interest, up to two grace years, 100% financing, optional 50% risk cover for your bank and, from the LevelUp stage, a 3 or 5% grant supplement.

Who is behind KfW innovation loans? KfW, Germany's federal promotional bank, runs them, offering business-finance programmes on behalf of the Federal Ministry for Economic Affairs and Energy (BMWE), many funded from the ERP special fund.

Can KfW loans be combined with grants or the Forschungszulage? Yes, KfW loans can often be combined with grants or the Forschungszulage, within State-aid ceilings and programme rules; some programmes like StartGeld cannot be combined with other KfW loans.

Which funding tier applies to my KfW innovation loan? Basis: simple product or process improvements (for companies at least five years on the market), the market launch of self-developed innovations and projects of companies that count as innovative under KfW criteria; up to €7.5m, no grant supplement. LevelUp: R&D projects and the implementation of self-developed innovations, such as a new production line; up to €25m, 3% grant supplement. HighEnd: large LevelUp R&D projects with a loan above 5% of the last annual group turnover, and AI innovations; 5% grant supplement. The higher the tier, the more KfW reduces the interest rate.

11. KfW loan, grants and the ERP grant supplement

A loan and a grant are not either/or: used well, they stack, and from the LevelUp stage KfW adds a grant supplement to the innovation loan.

In many cases a KfW innovation loan can sit alongside a grant, such as the Forschungszulage or a BAFA EEW grant, provided the same costs are not funded twice and the combined aid stays within the State-aid ceilings. This lets a company pair a cash grant on one part of a project with promotional credit on another, financing the whole at a lower blended cost. Two caveats matter. First, some programmes are not combinable: the ERP-Gründerkredit StartGeld, for example, cannot be used together with other KfW loans. Second, the KfW innovation loan carries an ERP grant supplement (Förderzuschuss) of 3 or 5% of the disbursed loan from the LevelUp stage, at most €200,000; it is granted under the de minimis regulation and counts against your de minimis budget. A repayment subsidy (Tilgungszuschuss) that forgives part of the principal exists in other KfW programmes such as the EEW loan 295. Because the cumulation and subsidy rules are programme-specific, the safe step is to confirm them for your exact programme before you stack instruments, which is part of what we structure for you.

12. The timeline, end to end

There are no competitive cut-offs; applications are rolling, and durations depend on the bank and the programme.

Pick the programme and confirm fit (days to weeks), identify the right KfW programme for your size, age and purpose, and check the exclusion list.
Financing discussion with your bank, hold a documented discussion with your Hausbank before doing anything binding.
Application via the Hausbank (days to weeks), the bank prepares the application and forwards it to KfW, before the project starts.
KfW commitment (Zusage), KfW and the bank assess creditworthiness and risk, then KfW issues its commitment and a contract offer.
Loan contract and drawdown, you sign with the bank and draw the funds; what matters for eligibility is that the application was filed before the project began.
Grace period and repayment, repay no principal during the grace years, then repay over the remaining term, with early repayment possible against a prepayment penalty, at the LevelUp and HighEnd stages no earlier than three years after the commitment.

KfW has no application deadlines for its business loans, you apply when you are ready, before you start. There is no legal entitlement, and approval depends on the bank's and KfW's assessment.

13. What to prepare

A KfW loan is assessed like a bank loan (plus KfW's own risk check where a liability release is sought), so prepare the documents a bank expects.

The core set is a project and investment description (what the financing is for and what it changes); a cost and financing plan with the total need and the role of the KfW loan; the business and financial documents a lender reviews (recent annual accounts or, for founders, a business plan with projections; current business assessments; and, where relevant, collateral information); and the company and eligibility evidence (size category, age and purpose matched to the chosen programme, and confirmation the activity is not on the exclusion list). Where a liability release is sought, KfW carries out its own assessment of the project's credit-default risk, so the case for the project's viability matters as much as the figures. The bank prepares everything on the prescribed forms; the exact list is the Hausbank's.

14. Industry examples

KfW finances across virtually the entire commercial economy, subject to the exclusion list, because its business loans fund general purposes rather than a single sector. These are illustrative project shapes, not named beneficiaries.

A manufacturer financing new machinery or a new site (ERP-Förderkredit KMU or großer Mittelstand).
A founder or freelancer financing the first years of a new business with little collateral (StartGeld 067).
A retailer or service firm financing working capital, fit-out or a takeover (ERP-Förderkredit KMU).
A technology or industrial company financing digitalisation or innovation (ERP-Förderkredit Digitalisierung 511/512 or Innovation 513/514).
A larger Mittelstand company financing a major investment (großer Mittelstand 375/376).
An energy-investing company financing efficiency or renewables, often with a repayment subsidy.

The common thread is the KfW logic: a fundable purpose and a need for cheap, long, accessible financing, provided as a loan via the Hausbank, with risk-sharing where collateral is thin. A project on the exclusion list cannot be financed.