Förderbank

Förderbank is a German term that translates to "development bank" or "promotional bank." These institutions are typically owned or controlled by the government, either at the federal or regional level. Their primary purpose is to support economic development and public policy objectives through various financial instruments.

Förderbanken operate by providing long-term loans, equity investments, guarantees, and grants to businesses, particularly small and medium-sized enterprises (SMEs), startups, and projects that align with strategic governmental priorities. These priorities can include innovation, environmental protection, infrastructure development, job creation, and regional economic strengthening. They often work in conjunction with commercial banks, offering co-financing or risk-sharing arrangements to make projects more feasible.

Unlike commercial banks, Förderbanken are not driven by profit maximization. Their focus is on fulfilling their public mandate, which means they may undertake projects or support sectors that are considered too risky or less profitable for private financial institutions. This makes them crucial for financing projects with significant societal benefits but limited immediate financial returns.

Examples of common areas of funding include renewable energy projects, research and development initiatives, housing construction, and the establishment or expansion of businesses in structurally weak regions. The specific activities and focus of a Förderbank can vary depending on the jurisdiction and the prevailing economic and social policies.