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German Companies Have Applied for State Aid Worth $11.6 Billion

German Companies Have Applied for State Aid Worth $11.6 Billion

(Bloomberg) --

German companies have applied for state aid worth 10.6 billion euros ($11.6 billion) under a government program run by state bank KfW.

“We expect to see a significant increase in the volume and number of applications in the next few weeks,” said Guenther Braeunig, head of state development bank KfW which is tasked with shoring up the finances of the country’s virus-hit companies. So far, a total of 2,500 companies have applied for liquidity help.

KfW has several hundred billion euros available to provide liquidity for firms struggling with a collapse in demand. Despite these and other measures to aid companies, the concern is that support won’t reach many smaller, cash-strapped firms quickly enough to keep them afloat.

As the devastating implications of the disease become clear, German Chancellor Angela Merkel’s ruling coalition has abandoned a long-standing commitment to balanced budgets and is using emergency powers to suspend rules restricting borrowing that are enshrined in the constitution. Merkel’s government last week secured crisis spending powers to unleash a historic rescue package worth more than 750 billion euros ($821 billion).

As cases rise, the federal government on Wednesday has agreed with regional states to extend the nationwide lockdown aimed at slowing the spread of the coronavirus for another two weeks until April 19, which will mean an additional burden for many companies.

©2020 Bloomberg L.P.