Investors need partners that support them in developing major projects. The German federal state’s investment banks are considered financially strong partners in this context, as the government is continuously interested in fostering growth and creating new jobs. In Brandenburg, this is the Investitionsbank des Landes Brandenburg (investment bank in the federal state of Brandenburg, ILB)
Securing overall financing of a given project is one of the most important aspects in making an investment decision, and it has a considerable influence on a company’s choice of location. In particular, the availability of funds and promotional loans at the investment location, as well as the provision of venture capital under certain circumstances, are often considered favourable and attractive sources of financing for companies. The Investitionsbank des Landes Brandenburg (ILB) offers professional advice on all matters related to funding.
The ILB was established in Potsdam in 1992 and is Brandenburg’s main promotional institute. For over 20 years, ILB’s core business has centred on promoting public and private investment projects in business, infrastructure, housing construction and, since 2014, employment. The bank finances both commercial enterprises, new businesses, agricultural and media companies as well as municipalities, municipal special-purpose associations and enterprises, municipal, cooperative and private housing sectors and employment, educational and qualification initiatives. Using funds provided by the state, federal government, European Union as well as its own funds, the ILB offers grants, loans at favourable interest rates, guarantees as well as venture and equity capital. It cooperates closely with savings banks and cooperative and private banks and is partnering with the business support institutes of the federal government and the European Union.
By promoting future-oriented projects, the ILB has played an important role in the development and structural transformation of the state of Brandenburg following the German reunification. Since 1990, the bank has been providing funds totalling EUR 34 billion, which in turn have led to investments amounting to EUR 70 billion. Thanks to these investments, it was possible to create more than 171,000 new jobs in Brandenburg over the past 25 years.
The federal state started a new EU funding period in 2014, which will continue until the end of 2020. In the course of this period, the ILB will, for the first time, be responsible for granting funds from the three major EU promotion funds. These include the European Agricultural Fund for Rural Development (EAFRD), the European Regional Development Fund (ERDF) as well as the European Social Fund (ESF). Until the end of 2020, these funds will provide Brandenburg with capital amounting to EUR 2.2 billion, which will be used to increase the state’s economic power and improve the quality of life of its citizens. The focus of promotion-related activities has been increasingly transferred to the ILB in the course of the new programme period.
For this reason, ILB’s hallmarks in 2015 include initiating numerous new funding programmes and launching own products. They will concentrate on the structural promotion of individual regions, strengthening important sectors and efficiently using the EU funds available. The ILB’s new funding programmes include the technology funding programme “ProFIT Brandenburg”, the employment programme “Brandenburger Innovationsfachkräfte” and its own product “Brandenburg-Kredit Gründung”. To strengthen internationalisation in the area of equity investment activities, new equity funds with a volume of EUR 100 million are being prepared in cooperation with the Ministry of Economic Affairs and Energy.
ProFIT Brandenburg. Technological progress can best succeed through continuous investments in research and development activities. The state government has therefore set itself the goal of increasing the proportion of research and development expenditure in the GDP to three per cent. One of the instruments being used to achieve this goal is ProFIT Brandenburg, the first funding programme to take advantage of a combination of grants and loans. Until 2020, Brandenburg will provide EUR 220 million, with EUR 200 million coming from the ERDF, to promote the transfer of technology in all phases of company-related innovation processes, including industrial research and experimental development up to a product’s introduction on the market. The loan portion allows the financing of up to 100 per cent of eligible expenditures. Interest rates are below market conditions and the loans do not require standard bank collaterals.
Brandenburger Innovationsfachkräfte (BIF). Brandenburg is facing challenges arising from demographic change and the movement of labour to other federal states. This is why the ILB promotes employment of highly qualified young talents at Brandenburg’s SMEs. In addition to awarding scholarships for students, the programme primarily focuses on promoting the employment of graduates as so-called innovation assistants. They must be employed for a minimum of 12 months, while their gross salary of at least EUR 2,200 is eligible for subsidies amounting to 60 per cent. This transfer of knowledge from the academic to the business sector will facilitate business innovations and growth.
Brandenburg-Kredit Gründung. In light of innovative digital business areas, start-ups and newly founded businesses are playing an increasingly important role in Brandenburg’s funding landscape. For this reason, the ILB supports start-ups, SMEs as well as non-SMEs with a maximum group turnover of EUR 500 million within the framework of an innovative programme as of 1 July 2015. The promotional loan provides financing of start-ups, acquisitions, active shareholdings, consolidation measures as well as working capital and investments. 100 per cent financing with up to EUR 25 million per project is possible, with terms of 5, 10 or 20 years and a grace period of one to a maximum of three years. Applications are filed with the house bank.
In addition to further locational advantages, such as the proximity to the federal capital, Brandenburg’s funding landscape also offers a variety of reasons to invest in the state. In cooperation with the Brandenburg Economic Development Board (ZAB) as well as the chambers and regional institutions for economic development, the ILB’s advisers inform their customers on all matters relating to funding – individually and free of charge at more than 30 locations in the state of Brandenburg.
The author has been CEO of the Investitionsbank des Landes Brandenburg since 2013. He has held various management positions at ILB since its establishment in 1992, most recently as head of corporate management and as a member of the executive board. Prior to that he worked for the predecessor of today’s NRW.Bank.