Economic Development

Small and medium-sized enterprises (SMEs) are an important factor in the success of the German economy. Over 99 % of all companies in Germany are part of the SME sector and therefore shape Germany's suitability as a location for business and investment. They provide 55 % of jobs and 80 % of trainee positions, and are Germany’s most important innovation and technology factor.

Construction site with cranes Source: © Fotolia.com/frenk58

The goal of economic and SME policy is to boost competitiveness, innovation and employment in the sector. BAFA plays an important role in this regard through its many support programmes, project funding and other measures.

In this way, BAFA reflects economic policy and implements policy decisions made by the Federal Government. It pursues a diverse and dynamic range of tasks, from funding of innovative start-ups, supporting small and medium-sized enterprises in business activities abroad or structural change projects, through to special funding measures, e. g., during the coronavirus pandemic.

In 2021 BAFA spent over € 3.2 billion on its various funding measures.

Business advisory services:

Companies face new challenges on a daily basis. Large corporations avail of the services of external consulting professionals to help them address these. BAFA aims to help SMEs access this type of support also.
We therefore fund consulting in all areas of the company, including HR, finance and administration. As part of an analysis, weaknesses are identified and company-specific recommendations for action are made.
This support programme is a core element in the promotion of economic development and SMEs and has been administered by BAFA for decades.

INVEST – venture capital grant

Germany is full of creative minds with good business ideas. However, start-ups often fail in the initial phase because they lack the necessary liquidity.

This support programme brings start-ups and investors together and helps companies find an investor to support them with private venture capital.

Private investors are encouraged to acquire shares in young, innovative companies and to make their own expertise available to them. If a private investor makes a direct investment, they receive a subsidy of 20 % of the amount invested as an acquisition grant. If they make an investment by means of a convertible loan, they can apply for a grant of 10 %. In this way, the programme benefits both sides.

Securing a supply of skilled labour

From a company’s perspective, a skills shortage presents the greatest business risk. Furthermore, the risk is set to increase as a result of demographic changes. To counteract a shortage of skilled labour, companies are also advised to consider new groups of applicants.

The focus of the “Tailored Placement” programme is therefore to supply small and medium-sized enterprises with skilled personnel and junior trainee staff. We currently fund around 140 consultants working on filling vacant trainee places with young people from Germany and abroad, as well as young adults without refugee status.

The establishment of mentoring programmes known as “Welcome Guides” (“Willkommenslotse”) to recruit and train refugees presents another means of closing the gap in terms of qualified staff in SMEs. It simultaneously meets the responsibility of society as a whole to enable sustainable integration into the German training and labour market, in particular for young refugees with prospects of long-term residence here. Nationwide, around 65 “Welcome Guides” help companies – predominantly SMEs – to integrate refugees into apprenticeships, internship programmes or full employment. Since 2022, this support programme has also been aimed at refugees from Ukraine.

Consulting Vouchers Africa

Since the “Consulting Vouchers Africa” programme was set up in 2021, BAFA has been funding external consulting services for small and medium-sized companies in the business sector, including skilled trades, in order to give the companies access to expert advice on business ventures in Africa. Among other things, this programme subsidises business case calculations, consultations about legal frameworks such as customs or import regulations, as well as measures to help companies establish local contacts. Funding provides a subsidy of 75% of eligible expenses for consulting, up to a maximum of € 13,500 per consulting voucher.

Electromobility – uniting economy and ecology

Electromobility aims to make mobility environmentally friendly.

A financial incentive is available to promote the purchase of new or pre-owned electric vehicles, externally rechargeable hybrid electric vehicles and fuel cell powered vehicles, with the subsidy coming partly from the manufacturer and partly from the Federal Government. The introduction of the Innovation Premium in June 2020, which doubled the Federal Government’s contribution to the environmental bonus, led to a further surge in demand for the funding programme. Subsidies have been granted for more than 1 million vehicles since funding began in 2016. As the vehicles are increasingly reaching market maturity, a new funding model will apply as of 2021. For example, subsidy rates will be reduced and plug-in hybrids will no longer be subsidised.

STARK

The transition away from coal-fired power generation is important for climate protection, because it reduces carbon dioxide emissions. As a result, coal-mining regions such as Lusatia or the Rheinische Revier are entering a period of sweeping structural changes.

This is why the STARK funding programme was established. It funds projects that support the transition to an economically, ecologically and socially sustainable economic region. Projects range from putting human resource capacities in place for structural development companies, to transferring technical innovation into practical applications, as well as stimulating start-up activities.

The aim is to develop the former coal-mining regions into internationally visible model regions that do business in a greenhouse gas-neutral, resource-efficient and sustainable way. A budget of € 2.8 billion has been allocated up to the year 2038.

Air-conditioning systems

The federal funding of COVID-compliant stationary air-conditioning systems (AC systems) is an emergency response to the coronavirus pandemic. Funding is available, for example, for AC in public spaces, such as municipal buildings, schools and daycare facilities to curb the risk of infection in high-footfall indoor areas. Subsidies are available for the retrofitting and upgrading of existing systems, as well as for new AC systems. Subsidies totalling around € 1.4 billion have been allocated for about 70,000 AC systems.

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