Chancellor Angela Merkel’s government announced a new “limitless” aid program for small- and medium-sized companies as part of an effort to support Europe’s largest economy in the coronavirus pandemic.
The program for loan guarantees is the latest in a range of measures introduced by the German government, which says the economy might contract even more this year than the 5% drop caused by the global financial crisis in 2008 and 2009.
The government will provide guarantees of as much as 100%, German Finance Minister Olaf Scholz announced at a joint press conference with Economy Minister Peter Altmaier Monday. Loans of up to 800,000 euros ($862,000) that will pay out very quickly will be available, he said.
The existing program only provides for an 80% to 90% loan guarantee and banks have been reluctant to take on new risk as the economy falters. Private lenders have thus pressed the government to expand the existing program by guaranteeing 100% of the loans. Bloomberg News reported on talks for the new program on Friday.
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