Financing is more than just raising capital: it is a strategic decision about growth, risk allocation, governance and the company’s ability to act. KOCH Rechtsanwaltsgesellschaft mbH advises entrepreneurs, companies and financing providers on the structuring, negotiation and implementation of financing in the SME and mid-cap segment—both in Germany and cross-border. Our advice combines regulatory certainty, contractual precision and an entrepreneurial, pragmatic view of the business model.

We provide financing certainty—from the initial structuring concept through to ongoing compliance.

At KOCH, clients receive a legal financing solution that

• is bank- and investor-ready,
• effectively manages liability and regulatory risks,
• works in day-to-day operations, and
• enables growth instead of slowing it down.

Our key advisory areas in corporate finance include:

1. Structuring of debt financing

We advise on traditional and structured debt financing, including:

• bilateral and syndicated corporate loans
• acquisition financing / leveraged finance
• project and asset financing
• working-capital financing (including revolving facilities and borrowing-base structures)
• refinancing and maturity extensions

Value added: clear covenants, a robust security architecture, and strong negotiation-ready documentation.

2. Factoring, leasing and asset-based finance

Factoring and leasing are core components of modern SME financing. KOCH supports institutions and companies in:

• drafting and negotiating factoring and leasing master agreements
• assignment and collateral structures, debtor/assets management
• refinancing and SPV set-ups
• insolvency-robust structuring (avoidance and segregation risks)

Value added: legally sound products and contracts that work in practice and remain resilient in crisis situations.

3. Financing models and regulatory law

Where financing is shaped by regulatory requirements, we ensure compliance with the KWG and KAGB and handle BaFin-related matters, including:

• assessments of licensing requirements and regulatory classification of financing models
• compliance
• advice and support in BaFin audits, remediation plans and special situations

Value added: regulatory stability without operational overload.

4. Equity and mezzanine (equity / hybrid financing)

We structure and negotiate equity and equity-like financing, including:

• private equity and family equity investments
• management participations / incentive programmes
• mezzanine instruments, profit-participation rights, silent partnerships
• convertible/option structures and investor governance

Value added: balanced risk allocation and clear control and exit mechanisms.

5. Capital markets and alternative financing

For capital-market or investor-facing formats, we advise in particular on:

• bonds and note loans (mid-cap structures)
• securitisation and fund structures (asset-backed / special topics)
• legal support for alternative financing models

Value added: clean issuance and documentation processes and legal robustness.

6. Financing in transformation, crisis and restructuring

When liquidity, covenants or the business model come under pressure, we assist with:

• covenant resets, standstill/waiver agreements
• distressed financing and bridge financing
• insolvency-related financing issues, protective-shield and StaRUG contexts
• negotiation management between stakeholders

Value added: preserving room to manoeuvre, managing risks and ensuring secure implementation.

7. Sales Finance

We advise manufacturers, distributors and financing providers on the legally sound structuring and implementation of sales finance solutions, in particular:

• leasing and hire-purchase models
• factoring and supply-chain-finance structures (including reverse factoring)
• dealer/manufacturer financing (captive finance)
• pay-per-use and subscription models
• security, retention-of-title and assignment structures as well as debtor management

Value added: sales growth through robust financing models, regulatory certainty (KWG/ZAG/RDG where applicable), lean operational processes, and resilient protection in default or insolvency scenarios.

Who we advise:

• SMEs and corporate groups (growth, reorganisation, succession, acquisitions, sales, management and employee participation models)
• family businesses and shareholders (structured financing, governance readiness)
• financing providers and investors (debt/equity/hybrid/sales, security packages, due diligence)
• factoring and leasing institutions (product and regulatory law, ongoing compliance

How we advise:

• clarifying the financing objective and risk architecture (growth, acquisition, sales growth, liquidity, transformation)
• structuring design (debt/equity/hybrid/sales, security, governance, regulatory fit)
• documentation and negotiation (covenants, warranties, pricing mechanics, CP sets)
• signing/closing management and ongoing compliance support.

Our standard:

Financing solutions that are robust for all parties involved — legally precise and economically practical.

Factoring and leasing companies operate in a highly regulated environment. Being financial services providers according to the German Banking Act (KWG), they require a robust regulatory and supervisory organisation, legally sound contractual frameworks, and a governance set-up that aligns BaFin requirements, refinancing logic and operational reality.

KOCH provides comprehensive advice to factoring and leasing institutions — particularly on supervisory law under the KWG and in related areas of financial and corporate law. We support institutions throughout their entire lifecycle: from determining licensing requirements and structuring products, to ongoing compliance organisation, and to handling special situations such as BaFin audits, outsourcing projects or crisis scenarios.

Our approach is pragmatic and tailored to each institution. We develop solutions that are both regulatorily robust and efficiently integrated into existing organisations—taking proportionality and risk orientation into account. Where needed, we work in multidisciplinary teams with tax, IT, risk or industry experts from our network.

Key areas of advice at a glance

• KWG supervisory law for factoring/leasing: licensing requirements, ongoing BaFin compliance, relevance of MaRisk/BAIT/DORA, fit-and-proper assessments, internal control systems.
• Product and contract advisory: factoring master agreements (true/non-recourse and non-true/with-recourse factoring), assignment and collateral structures, debtor management, refinancing and SPV set-ups.
• Governance & management body duties: suitability and duties of managing directors, liability prevention, D&O interfaces, qualifying holdings, advisory board/shareholder structures.
• Outsourcing & IT regulation: outsourcing management, service provider agreements, audit and contingency concepts.
• Special situations & disputes: BaFin audits, remediation plans, clawback/insolvency-avoidance risks under the Insolvency Code (InsO), enforcement against debtors, fraud and loss cases.

Value for institutions: legally robust products, more resilient governance, reduced audit and liability risks, and a corporate structure that supports growth and refinancing rather than slowing it down.

1. When does a factoring company need a KWG licence?

   A KWG licence is required if factoring is carried out as a financial service according to the German Banking Act (KWG). Relevant criteria include, in particular, the business model, the assumption of risk, and the structure of the assignment of receivables. We assess whether a licence is required and support the licensing procedure vis-à-vis BaFin.

2. What are typical regulatory pitfalls in factoring?

   Common issues include an unclear regulatory classification of the service, insufficient governance and internal control system (ICS) structures, outsourcing without a proper outsourcing management framework, and inadequate documentation relating to risk management, anti-money-laundering (AML) obligations, and IT security. It is also often overlooked that certain factoring structures may simultaneously qualify as debt collection services under the German Legal Services Act (RDG) or as payment services under the German Payment Services Supervision Act (ZAG), each of which may require separate regulatory authorisations. We review the licensing requirements and assist with the authorisation process before the competent authorities.

3. How must a factoring master agreement be structured to ensure assignments are insolvency-proof?

   Key elements are clear assignment mechanics, transparent debtor communication, effective collateral arrangements, and documentation designed to minimise clawback and avoidance risks in insolvency. We structure agreements so that they work in day-to-day operations and remain robust in insolvency scenarios.

4. What does BaFin focus on when auditing factoring or leasing institutions?

   BaFin typically concentrates on management body duties, risk management, outsourcing arrangements, compliance with AML requirements under the German Money Laundering Act (GwG), the overall compliance organisation, IT regulation (including DORA obligations), and evidence of proportional implementation. We prepare institutions for audits, accompany the process, and implement remediation plans in a legally sound manner.

5. How can growth (e.g., new sectors/products) be implemented in a regulatorily compliant way?

   Growth often requires adjustments to product design, risk appetite, governance, and outsourcing set-ups. We develop scalable structures—including policies for an appropriate new-product approval process—that enable new products or markets without jeopardising regulatory stability.