Georg Sellner: Financing for SMEs


For a long time, SMEs (small and medium-sized enterprises), which in Ger­many represent over 99 per cent of companies, approximately 80 per cent of the workforce and almost
40 per cent of turnovers, had been con­sidered a sleep­ing giant. At the latest, that changed with the second German economic mir­­acle. For, the small and medium-sized enterprises played a crucial role in en­­suring that the German economy grew by an impressive 3.6 per cent in 2010 and that the recession in the wake of the financial crisis could be quickly over­­come. In just the first three months of 2011, the German gross domestic prod­­uct rose by 1.5 per cent in comparison to the previous quarter.

If SMEs are the economic engine, then the Saving Banks Finance Group is the oil which keeps that engine running. With a market share of around 43 per cent, savings banks and federal state banks are the financiers of SMEs in Germany. With regard to financing handicraft busi­­nesses, the share of public banks is considerably higher. Two out of three handicraft business loans are granted by savings banks, three out of four hand­­icraft businesses are savings bank cus­tomers. Every other start-up is support­ed by a savings bank. In terms of distributing pub­­lic funds from the federal development bank KfW, the savings bank sector reaches a share of nearly 40 per cent when it comes to entrepreneur loans. With small-scale funding programmes such as the KfW start-up loan, it is over 50 per cent.

Savings banks and SMEs solidary during the financial crisis. The great significance of the savings bank organisation is reflected in the operating area of Sparkasse Darmstadt. As the leading savings bank in Southern Hessen, it is a strong partner of SMEs. Darmstadt-area companies came to know that during the financial crisis, in particular.


Namely in 2009, when the crisis was most strongly felt in the real economy, the sav­­ings bank further expanded its new-loan business with SMEs and, to­­gether with five other savings banks, allotted special loans for industrial and handicraft busi­­nesses as well as SMEs within the frame­­work of a Southern Hessian SME initiative. Owing to strong demand, that special allotment was raised later on. That soli­­darity between savings banks and SMEs was decisively instrumental in largely damp­­ing the effects of the financial crisis on the domestic econ­omy. For savings bank customers at least, there was never a “credit crunch”.

Sparkasse Darmstadt is there for SMEs in times of economic upturn as well. According to an economic survey by the Rhine-Main-Neckar Chamber of Industry and Commerce (IHK) of the spring of 2011, the business climate in­­dex in Southern Hessen is as high as has not been seen since the autumn of 2000. The business climate index serves as a current trend indicator for Southern Hessian companies. It is an average based on the assess­­ment of the present business situation and future expectations of companies. The index ranges between zero and 200 points. The higher the value, the better the business climate. The indicators for employment, investments and exports are determined based on the difference between positive and negative answers. Many com­pa­­nies are planning to in­­crease their staffs and investment budgets. Sparkasse Darmstadt is well equipped for the consequential rise in the demand for loans. During the first six months of 2011, new credit and loan commitments rose by around 11.2 per cent to 209.4 million euros compared with the same time period of the previous year. Such flexible and reliable lending policy ensures that SMEs are investing as planned and, thus, able to generate employment and prosperity in the region.

Core business of financing SMEs. Ad­­vis­­ing and financing SMEs are part of the core business of Sparkasse Darmstadt. Besides classic house bank credits such as investment loans and current account advances, public funding loans such as the KfW entrepreneur loan and funds from the ERP innovation programme (a KfW funding programme) are incorporated in the financing. Last year, new business of the savings bank derived from the distri­­bution of funds in the commercial sector doubled from about six million to twelve million euros. Through collab­oration with savings bank alliance partners like Deut­­sche Leasing and Deutsche Factoring, the programme also includes liquidity-conserving financing solutions such as leasing or factoring.


The offering further includes equity fi­­nan­c­­ing (“mezzanine”) in the form of sub­or­di­­nated loans or silent investments. As a result of the financial crisis and the en­­su­­ing recession, the equity cover of many a com­­pany became thin. Accord­ing to a 2011 study of SMEs by the German Savings Banks Association (DSGV), al­­most 30 per cent of small and medium-sized enterprises in Ger­many operate without equity capital. Equity financing can remedy that.

SMEs also receive support with their foreign business. After all, SMEs have contr­ib­uted considerably to the export accom­­plishments of the German economy. In addition to foreign-business fi­­nancing and advice, customers are given access to the international network of the Saving Banks Finance Group in over 100 countries.


Know-how and capital for start-ups. Spar­­kasse Darmstadt supports young entre­­preneurs venturing into independence. On the one hand, it assists them with its know-how, for example, in evaluating markets and competition conditions or the chances for success of the start-up project. An expert and realistic assessment of the proposed project is essential, considering one in four start-ups gives up within three years ac­­cording to DSGV. On the other hand, start-up loans are offered and pub­­lic funds such as the KfW start-up loan are included in the financing. The savings bank also col­­lab­­orates with experts from the venture-capital and investment com­­panies of the Saving Banks Finance Group, allowing it to develop additional funding sources for young entrepreneurs.
Savings bank and region are inextricably linked. All of that underscores the im­­por­­tance of Sparkasse Darmstadt in provid­ing support to SMEs. Such a key role is possible only thanks to deep regional roots – an important structural characteristic of savings banks. In contrast to many other credit institutions, savings banks always focus on specific operating areas and are decentralised. That spatial focus – the regional principle – is not only statutory but also results from the savings bank’s founding principles of “public mandate” and “public administration”. Since all of the activities of a savings bank take place in the region of its sponsors, it has a keen interest in the sustained well-being of the people and companies in its home area. In other words: the relationship between savings bank and region func­­tions like a control circuit. Savings essen­­tially return to where they were generated.

Hr.-Sellner,-22.05.2007The author (born in 1952) is CEO of Sparkasse Darmstadt, state spokesperson for the savings bank boards of directors for Hessen-Thuringia as well as deputy spokesperson for the savings bank boards of directors at the federal level. Previously, Georg Sellner worked for Sparkasse Odenwaldkreis as a mem­­ber of the executive board as of 1985, and as CEO from 2001 to 2003.