1. Access to Finance for SMEs
Restructuring Forum:
The Impact of Financial Investors on Enterprises
Brussels, 6 July 2010
Frank Lang
KfW Liaison office to the EU

2. 60 years of KfW
Financing with a public mission
● Promotional bank of the Federal Republic of
Germany
● Founded in 1948 as
Kreditanstalt für Wiederaufbau
● Shareholders: 80% Federal Republic,
20% federal states
● Headquarters: Frankfurt am Main
Branches: Berlin and Bonn
● Representative offices: around 60 offices and
representations worldwide
● Balance sheet total at end-2009: EUR 400 billion
● Around 4,200 employees (2009)
● Best rating: AAA/Aaa/AAA
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3. KfW in comparison
Balance sheet total vs commercial banks Balance sheet total vs promotional banks
EUR in billions (2009) EUR in billions (2008)
400
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200
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500 100
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4. A bank with a wide array of functions
Domestic promotional business
Promotion of Financing of
SMEs, entrepreneurs, Promotion of municipal
International Promotion of
environmental and housing, education, infrastructure
project and developing and
climate protection infrastructure and projects and
export finance transition countries
business start-ups social development promotion in
Europe
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5. Neutrality through on-lending principle in loan business
No branch network of our own
Customer Customer's
bank
File loan application If approved, customer‘s
with their regular bank bank forwards
before start of investment application to KfW
Private individuals
Enterprises
Enter into the loan refinances the loan
Public agreement and at favourable
institutions disburse the loan refinancing
interest rates
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6. Domestic promotional business
Business area KfW Mittelstandsbank
Target group
Enterprises
Financing products
● Classic promotional loans
● Mezzanine financing
● Private equity
● Advisory services
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7. Domestic promotional business
Business area KfW Mittelstandsbank
Target group
Enterprises
Supported areas
● Access to finance (including growth)
● Business founding
● Innovation
● Environment and Climate protection
● Internationalisation
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8. Financial Intermediaries
The Network of Financial Institutions for SMEs (NEFI)
ALMI Sweden AWS Austria BDB Bulgaria Finnvera Finland Hipoteku Banka Latvia
HBOR Croatia ICO Spain KfW Germany KredEx Estonia UniCredit Italy
MFB Hungary OSEO France SID Slovenia SNCI Luxembourg SZRB Slovakia
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9. Access to Finance for SMEs
The European Commission’s approach
R is k c a p it a l D e b t f in a n c i n g & g u a r a n t e e s
E a rly s ta g e s H i g h G r o w t h In n o v a t i v e M i c r o fi n a n c e S M E G u a ra n te e s
- In t e ll e c t u a l p r o p e r t y S M E S c h e m e (G IF ) - Loan
- T e c h n o lo g y t r a n s f e r - V C fu n d s - M i c ro c r e d i t
- S e e d fi n a n c e • s e e d & s ta rt-u p R o u n d ta b le o f - E q u ity & m e z z a n in e
- In v e s t m e n t r e a d i n e s s • e a r ly e x p a n s i o n s t a g e b a n k e rs & S M E s - S e c u r i t is a t io n
- B u s in e s s a n g e l s
B u s in e s s A n g e ls
B e t t e r g o v e rn a n c e
C a p a c i t y b u il d i n g
P u b l ic s to c k
m a rk e ts
Enterprise’s revenue
F o rm a l V e n tu re C a p ita l F u n d s
B a n k lo a n s a n d g u a ra n te e s
S e e d /e a rly s ta g e V C F u n d s
B u s in e s s a n g e ls
E n t r e p r e n e u r, f r ie n d s , f a m il y
Pre-seed phase
Seed phase S ta rt-u p p h a s e E m e r g in g g ro w th D e v e lo p m e n t
V a lle y o f D e a t h E n t e r p r is e ’s d e v e lo p m e n t s t a g e
H IG H E R R IS K L O W E R R IS K
E U p o lic y d e v e lo p m e n t E U f in a n c ia l in s t r u m e n t s
T h e f in a n c ia l e n v ir o n m e n t : E U p o lic ie s a n d f in a n c ia l in s t r u m e n t s u n d e r C IP
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10. Access to Finance for SMEs
Measures of finance from a national promotional bank –
the KfW example
Loans
● Business founding (KfW StartGeld)
● Business growth (KfW Unternehmerkredit)
● Safeguarding access to finance in the crisis (KfW Sonderprogramm)
Mezzanine (subordinated loans)
● Business founding (ERP Kapital für Gründung)
● Business growth (KfW Kapital für Arbeit und Investitionen)
● Innovation (ERP Innovationsprogramm)
Equity
● Venture Capital (ERP Startfonds)
● Equity for SMEs (ERP Beteiligungsprogramm; and others)
Advice
● Business founding (Gründercoaching)
● Round Table
● others (e.g. networking; energy efficiency advice)
Environment and Climate Protection
● Loans and advice for environment protection and energy efficiency measures
● Renewable Energies
● others (e.g. demonstration projects)
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11. Access to Finance for SMEs
Debt financing and guarantees
guarantees
EIB / EIF
debt
debt guarantees
promotional debt commercial debt
SME
bank bank
guarantees
e.g. NEFI members
debt
equity
capital
markets
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12. Access to Finance for SMEs
Risk capital / VC funds
EIF
equity
public equity equity
VC fund SME
investors
e.g. NEFI members
equity
institutional
investors
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13. Access to Finance for SMEs
Special example
Turn around consulting
● SMEs that need a turn around owing to an unexpected development in their business
although their market perspectives are good
● Grants for consulting services
● Supported by the European Social Fund
● Applicable only in case of a positive forecast for future business development
● Identification of weaknesses
● Setting up an action plan
● Implementation of measures
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14. Access to Finance for SMEs
Special example II
KfW Special Programme (KfW Sonderprogramm)
● Part of the German federal government’s crisis response package
● Quick and flexible response
due to the SME financing experience of the national promotional institution
● includes
● Investment capital and working capital
● SMEs and other enterprises
● Project finance
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15. Cooperation of EU and national level to support SMEs
Advantages and examples
Combination of the EU and national level
● Leverage of national/regional/private funds
● Risk sharing EU and national level helps reaching more final beneficiaries
⇒Involvement of EU institutions guarantees a European added value
National/regional level is crucial for the success of EU SME policies
● A “one size fits all approach” is not suitable for 27 different member states
● National/Regional institutions know their respective markets and clients
● National/Regional institutions have well-established financing programmes and
distribution channels
Examples
● KfW StartGeld Programme for business founders and young enterprises.
● KfW-StartGeld is supported by a guarantee funded under the EU Competitiveness and
Innovation Framework Programme (CIP)
● Example from French OSEO: Range offering Guaranty + Mezzanine to help and co-
finance Innovation, Investment and Internationalization to grow up SMEs
© KfW • Thema der Präsentation • Ort • Datum 15

16. Key challenges for SME policy in the EU and
best practice answers by national promotional institutions
● Climate protection
EU 20 20 20 goals for climate protection
●
⇒ Strengthening the contribution of SMEs for climate protection,
e.g. ERP Environmental and Energy Efficiency Programme
● Innovation
● EU innovation and research strategy plan
⇒ Financing programmes to support the innovation of SMEs,
e.g. ERP Innovation Programme; KfW StartGeld
● Access to Finance
● EU recovery plan to safeguard access to finance for SMEs during and after crisis
⇒ special programmes for SMEs,
e.g. KfW Sonderprogramm
● Internationalisation
● Enhancing the role of European SMEs in international trade
⇒ Financing foreign investments of SMEs; services for the internationalisation of
SMEs
© KfW • Thema der Präsentation • Ort • Datum 16

17. Supporting SMEs via cooperation of EU and national level:
Some proposals from national promotional instutions
EU 2020 strategy as a basis for the support of the competitiveness of SMEs
● Improving the general environment for SMEs
● Strengthening the internal market
● Adaptation of state aid measures
● Improving the access to finance
● Risk sharing approaches
● EU support for national financing programmes for SMEs
● Cooperation of European Commission, EIB and other long-term investors
Special measures to support the internationalisation of SMEs
● Accompanying SMEs in their internationalisation process
● Training banks and investors (→ working with intermediaries: Training in fields
where they don’t have experience: innovation, internationalisation, … )
© KfW • Thema der Präsentation • Ort • Datum 17

18. Thank you for your attention
Frank Lang
KfW Liaison Office to the EU
Square de Meeûs 37
B – 1000 Brussels
Tel.: ++32 2 2333851
frank.lang@kfw.de
www.kfw.de