Michael Burchardt & Stefan Schneider: BGuarantees or investments as financing and funding for Thuringia’s medium-sized companies

fotolia_83616851_xxlApart from qualified employees, the positive development of Thuringia’s ­economy needs one thing above all else: stable financing. However, company values often do not hold enough value for banks to see them as collateral. Therefore, guarantees are often indispensable for start-ups and small companies.

Thuringia is a state with great diversity and a kind and vibrant population. A rich history, beautiful landscape, innovative international research and regional cuisine are what makes the state unique. Creating value through good work – that is what Thuringians are known for. Whether large or small company, they all share the ambition to offer top innovative products.

The industrial diversity is the key to the economic success. Mechanical engineering and vehicle construction, metal processing, optics and precision engineering, medical technology, the plastics industry, software development, craft, trade and logistics – Thuringia has it all. This mixture and Thuringia’s central position make it an attractive business location for investors from around the world.

But, at the same time, it is also a state for medium-­sized companies. 99 per cent of the companies have less than 250 em­­ploy­­ees. These are the companies that support the economy. For almost 25 years, the Bürgschaftsbank Thüringen GmbH (BBT) and the Mittel­­ständische Beteiligungs­­gesellschaft Thüringen mbH (MBG) have been supporting small and medium-sized companies in Thuringia by providing guarantees or assistance with investments in the companies.

No project that makes sense economically should falter because of financing problems when standard collateral for banks is missing or insufficient. For this reason, the BBT offers established companies and business as well as entrepreneurs deficiency guaranties as valuable loan securities. As part of promoting me­­­­dium-sized businesses, they are counter-­guaranteed by the Federal Republic of Germany and the State of Thuringia. The typical silent partnerships strength­­ening equity capital are secured by taking on guarantees by the Mittelständischen Beteiligungs­gesellschaft Thüringen.

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Deficiency guarantees of up to 1.25 million euros and a maximum guarantee of 80 per cent are granted to the individual companies based on the European aid scheme. Commercial enterprises and freelancers apply for a guarantee via their principal bank or directly at the Bürg­schaftsbank Thüringen, depending on the programme.

After the German reunification in 1990, many new private enterprises were founded when large numbers of jobs were lost at former state-owned businesses – a difficult and risky process for many Thuringians. Starting operations in 1991, the Bürgschaftsbank Thüringen supported them in facing this challenge, and its guarantees made it possible for many to be founded.

Today – after 25 years – many of these companies are regulating succession, which caused more than half of new business in crafts, industry, trade and freelancing in 2015. Since the Bürgschaftsbank Thüringen was founded, it has prov­­ided 9,100 guarantees to local small and medium-sized businesses as well as to freelancers. This equates to a total volume of 1.7 billion euros, securing credits of 2.15 billion euros and an underlying investment volume of 7.7 billion euros. This financing and the corresponding investments created 42,049 new jobs or secured 108,740 jobs in Thuringia for the past 25 years.

The affiliate MBG was founded in 1993 and provides economic equity as a neutral temporary partner, usually in form of a typical silent partnership. It operates with all banks, is independent of the sector and does not influence business activities.

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The MBG supports small and medium-sized businesses and start-ups in the commercial economy. Partnerships are available from 50,000 euros to a maximum of 1.25 million euros, or up to 2.5 million euros in exceptional cases. This is how the MBG strengthens the businesses’ equity capital in Thuringia and secures investments and growth. The rating improves and chances for new credits increase. The entrepreneur remains in charge since the Mittelständische Beteiligungs­gesellschaft does not get involved in daily matters of the business.

These partnerships are useful for growth and innovation projects as well as for financing business successions and start-ups. The MBG is not limited to certain areas of business but rather is geared towards all medium-sized companies.

Apart from the standard silent partnerships, it also grants 10,000 euros to 50,000 euros in capital from the Mikro­­mezzaninfonds Deutschland – provided by the Federal Ministry of Economic Affairs and Energy, specifically for founders and new and small businesses. Micro-entrepreneurs in particular often have no access to equity capital. Invest­ments and operating resources can by financed using new capital from the funds of the European Social Fund.

Both organisations closely cooperate with all banks and savings banks in Thuringia that provide financing solutions for medium-sized businesses. Further­more, the BBT and MBG are in contact with the Chamber of Commerce and Industry and the Chamber of Trade as well as with tax consultants, auditors and business consultants. They sees themselves as self-help institutions for the economy since they are not out for profit but instead are geared towards promoting the economy and will continue to implement important promotion goals in economic policy for the Free State of Thuringia in the future.

gf_buergschaftsbank-thueringenMichael Burchardt
Michael Burchardt was employed at the Landesbank Hessen-Thüringen as a consultant and group leader for corporate banking credit business in Thuringia and the new German federal states up until he started working at the Bürgschaftsbank Thüringen GmbH. As of 1st October 2003, he started working as the head of the credit department of the Bürgschaftsbank Thüringen GmbH and was appointed as Managing Director by the Administrative Board on 11th November 2006. Since 2007, he has also been the Managing Director of the Mittelständischen Beteiligungsgesellschaft Thüringen mbH.

gf_buergschaftsbank-thueringen2Stefan Schneider
Stefan Schneider was appointed managing director of the Bürgschaftsbank Thüringen GmbH and the Mittelständischen Beteiligungsgesellschaft Thüringen mbH on 1st July 2013. After working in central corporate banking and risk controlling, he transferred to a public bank, where he was in charge of controlling development business. Most recently, he was responsible for the operating area of the business development bank. Mr. Schneider is a deputy member of the Board of the European Guarantee Institutions and member of the IT strategy board of German guarantee banks.