Berlin - German Chancellor Angela Merkel's cabinet agreed Wednesday on the structure of a 100-billion-euro (125 billion dollars) government fund to aid struggling firms.

Companies hard hit by the global economic downturn will be able to apply for state assistance from the first half of March under the terms of the deal that runs until the end of
2009.

"This is a signal for German companies that have got into temporary difficulties as a result of the economic crisis through no fault of their own," said Economics Minister Karl-Theodor zu Guttenberg.

The first beneficiaries of the fund are expected to be ailing carmaker Opel and components delivery group Schaeffler-Continental, which both face massive liquidity problems.

The fund comes on the heels of a 500-billion-euro bail-out for German banks and two economic stimulus programmes worth more than 80 billion euros designed to drag the country out of recession.

The new resources amount to 25 billion euros in credits for large companies and credit guarantees worth a total of 75 billion euros. The credits will be supplied by the state-owned KfW bank.

Only companies with an annual turnover of at least 500 million euros can tap into the new fund. The maximum credit they can receive is 300 million euros.

To qualify for aid, the companies must present a viable business plan. A separate KfW fund of 15 billion euros has already been made available to medium-sized firms.

German Federation of Industry president Hans-Peter Keitel cautioned firms against rushing to grab state aid, saying they should consider other options first.

"I am afraid an avalanche will happen once a company applies for state aid for the first time," he said. (dpa)