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Financial support and funding for your business


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    Intro

    Do you need money to help you realize your plans and projects? Read on to find out about governmental incentives and other financial services available in Germany and the City of Munich.

    GTAI's online guide for foreign investors

    An extensive online guide for investors is available from Germany's economic development agency Germany Trade and Invest (GTAI). The guide lists and describes a variety of programs designed to support economic activities at different stages of the investment process. The support provided ranges from cash incentives to labor-related and R&D incentives.

    Government grants and incentives

    The German government makes grants and incentives available to certain target groups and for certain projects. For example, people seeking to start a business as a way out of unemployment may be eligible for a start-up grant from the Federal Employment Agency. People thinking about launching a business and new start-ups can also take advantage of government-backed coaching programs.

    • Start-up grant

    The start-up grant is a discretionary grant provided in two phases by the Federal Employment Agency. For the first six months, start-up entrepreneurs receive a monthly grant equivalent to their most recent unemployment benefit amount to safeguard their livelihood, plus EUR 300 to cover social insurance. The EUR 300 sum for social insurance can then be granted for a further nine months if evidence of intensive full-time business activities can be provided. Eligibility for this grant is defined in an extensive catalogue of criteria. For example, at the time when they apply for the grant, start-up entrepreneurs must be entitled to unemployment benefit for at least a further 150 days. They must also have the viability of their business plan validated and prove that they possess the knowledge and skills they will need to engage in self-employed activity. It is not possible to switch directly from paid employment to government-assisted self-employment. The grant is available only for full-time activities.
     

    • Reintegration benefit

    Reintegration benefit is a form of assistance provided to needy individuals who receive unemployment benefit ("ALG II"). Its purpose is to help them move into (full-time) self-employment or to resume dependent employment. The benefit amount depends on the duration of unemployment and the size of the applicant's dependent household. It is provided for a maximum of 24 months. Additional loans and subsidies up to a maximum of EUR 5,000 can also be made available for the procurement of materials needed to engage in self-employed work. Applications for reintegration benefit must be submitted to the local job center before work self-employed activity commences.  
     

    • Other subsidies

    An assortment of other grants and subsidies (such as EXIST, FLÜGGE, BayTOU, SIGNO sponsorship for SMEs, innovation vouchers for SMEs and Erasmus for young entrepreneurs) are provided by the national and regional governments and by the EU. The various options can be researched in the grants and subsidies database run by Germany's Federal Ministry for Economic Affairs: www.foerderdatenbank.de (in German only).

    Public loans

    All public financial assistance is disbursed via "house banks": Start-up entrepreneurs cannot obtain loans directly with public funding bodies, but only via a regular financial institution of their choice. Applications for a loan must always be submitted before the project to be financed commences.

    As a rule, public loans provide very attractive terms and conditions, i.e. low interest rates, long maturities, initial periods of grace and the possibility of being exempted from liability.

    • LfA Förderbank Bayern

    LfA Förderbank Bayern is a special-purpose bank operated by the Free State of Bavaria. Its mission is to promote lasting economic development in Bavaria. In this capacity, the LfA provides long-term, low-interest loans, guarantees against default, exemptions from liability, other guarantees and investment capital to start-up entrepreneurs and small and medium-sized enterprises (SMEs).   

    • KfW banking group

    Throughout Germany, KfW supports SMEs, entrepreneurs, freelancers and start-ups by providing credit facilities, subordinated loans, investment capital and advice. Its financial assistance ranges from start-up financing of up to EUR 100,000 tailored specially to the needs of start-ups and young companies to investment capital in the millions of euros. In this context, KfW focuses primarily on financing new businesses, capital spending and innovation. 

    Munich Fund

    The Munich Fund is a program operated by the City of Munich in collaboration with the savings bank Stadtsparkasse München.

    The Munich Fund gives start-up entrepreneurs who live and work within the city's boundaries fast, unbureaucratic access to loans.

    Capital investments and the purchase of operating resources are eligible for support for up to one year after the company's launch. Applications should be made directly via the Stadtsparkasse München and must be submitted before the project for which funding is required begins.

    Microfinance

    Where traditional bank loans are not in the frame for your business activities, microfinance can be a useful alternative.

    Microfinance is suitable for smaller credit volumes, but can be increased to a maximum of EUR 20,000 provided the principal is fully repaid. Microfinance solutions can be accessed via accredited microfinance organizations.
    These organizations meet credit applicants in person, provide one-on-one advice and recommend that the GLS Bank approve their application. A microloan fund set up specially by federal government provides the GLS Bank with a safety net in the event of loan defaults. Effective interest rates and standard terms and conditions are standardized for the whole of Germany. Beyond that, however, the microfinance organizations decide for themselves what security loan applicants must furnish, as they are required to foot the bill for non-performing loans. 

    Crowdfunding

    Crowdfunding is an emerging alternative financing vehicle that has experienced a recent boom in Europe and North America. Campaigns are usually launched via the Internet and are often used by start-up companies. Different types of crowdfunding include equity-based crowdfunding, credit-based crowdfunding and regional crowdfunding platforms, for example.