Gründungszuschuss: Germany's Start-up Grant Explained

If you lose your job in Germany and want to start a business, the Federal Employment Agency (Bundesagentur für Arbeit) may pay you to do it. The programme is called the Gründungszuschuss, and almost nobody translates it, so expats tend to discover it late. Late is the problem. Most rejected applications fail on timing, not on the business idea.

The grant sits in the German Social Code, Book III. The rules are short and strict, and every one of them below comes straight from the statute.

Who can get it

Under § 93 SGB III, the agency can pay the grant to people who end their unemployment by becoming self-employed full-time. Three conditions apply:

• On the day you start, you still have at least 150 days of unemployment benefit (ALG I) left.
• You prove the business is viable with an opinion from a qualified body. The law names chambers of commerce and crafts, professional chambers, trade associations and banks as examples.
• You show you have the knowledge and skills to run it.

Two exclusions catch people out. No grant is paid while your benefit is suspended, for example during a sanction period. And you cannot receive it if a previous self-employment grant under the same law ended less than 24 months ago.

The word that matters most is “can”. This is a discretionary benefit. Your caseworker may decide you are easy to place in a job and refuse. Arrive with a clear argument for why self-employment is your realistic route back to income.

What it pays

Section 94 sets the amounts. For the first six months you receive a sum equal to your last unemployment benefit plus €300 a month. The agency may then pay €300 a month for nine further months if you document that you are actively running the business.

Phase 1: 6 × (€2,400 + €300)

€16,200

Phase 2: 9 × €300

€2,700

Maximum over 15 months

€18,900

The benefit amount is illustrative. The second phase is also discretionary.

The €300 is meant for social security, and that is not a figure of speech. While on the grant you are no longer insured through the agency, so you must arrange your own health and long-term care insurance. Clarify with your health insurer before you start whether you can stay in the public system.

Timing: the 150-day rule in practice

How long you receive ALG I depends on your insurance record and age under § 147 SGB III. Someone aged 50 or over with at least 30 months of insured employment in the relevant period is entitled to 15 months, which the agency counts as 450 days.

1. Day 1Registered unemployed. Benefit decision: 450 days.
2. Days 1 to 300Benefit paid. Each day uses one day of entitlement.
3. Day 300Exactly 150 days remain. Latest possible start date for the business.
4. Before the startApplication submitted, expert opinion in hand.

Source: §§ 93, 147 SGB III; own calculation

Quitting your own job changes the maths sharply. Voluntary resignation normally triggers a twelve-week sanction period, and under § 148(1) no. 4 SGB III it cuts your total entitlement by at least a quarter. Someone under 50 with twelve months (360 days) would drop to 270 days, sit through 84 days without benefit, and then have only 120 days of payments before hitting the 150-day line.

Get your exact entitlement confirmed in the benefit decision. Even a few days can decide if you land above or below the threshold on your chosen start date.

Apply before you start, always

Section 324 SGB III says benefits are only paid if applied for before the event that triggers them. For this grant, that event is the start of your self-employment. Register the business first and apply afterwards, and you will most likely get nothing, unless the agency accepts a hardship exception.

The safe order: application submitted, expert opinion attached, then business registration or the commercial register entry as your start date.

The business plan and expert opinion

The qualified body reviews your plan and confirms the business can plausibly support you. For a software product that is genuinely hard in the first months, because revenue often starts late. Hard evidence helps: interview findings, letters of intent from pilot customers, pre-orders from a smoke test. Forecasting €5,000 in revenue in month three with nothing behind it convinces nobody.

Many software founders present a more honest model: consulting or service revenue at first, product revenue later. It reads as credible because it is. If you are still collecting evidence, our guide on how to validate a business idea shows what reviewers find persuasive.

Why applications get refused

Three reasons come up again and again. The first is timing: too late, or the business already started. The second is a caseworker who sees you as easy to place, particularly in occupations with many vacancies, and finds no reason to fund self-employment when a job offer is within reach. The third is a plan that reads like a side project, with working hours, revenue forecast and customer acquisition so vague that nobody can see what you will live on a year from now.

A refusal is not final. You can lodge an objection (Widerspruch) within one month of the decision. Do not start the business while the objection is pending, or you may lose the claim altogether.

After you start: two deadlines

You can take out voluntary unemployment insurance as a self-employed person under § 28a SGB III, but only if you apply within three months of starting. Miss it and the door usually closes. For a startup with an uncertain outcome, it is a cheap safety net.

The second grant phase needs its own application near the end of month six, with proof of business activity such as invoices, contracts or management accounts.

Company form and other routes

The grant works for sole traders, freelancers and companies. If you form a UG or GmbH, you must count as self-employed for social security, which for a shareholder-director generally means at least 50 percent of the shares or a genuine blocking minority. Three co-founders on a third each should check this before incorporating.

No ALG I entitlement means no Gründungszuschuss. People receiving basic income support under SGB II can look at the Einstiegsgeld under § 16b SGB II instead. Founders coming out of a German university should compare the EXIST Business Start-up Grant, which can pay considerably more.

The grant covers your living costs, not your product. Development still needs your own money, a co-founder or a partner. Venture studios such as OnlineBuilders contribute engineering rather than cash on selected projects, which can sit well alongside the grant.

Next step: get your benefit decision, calculate your latest start date with 150 days remaining, and put it in your calendar. The expert opinion should be ready four weeks before that date.

Step by step

1. Register as unemployed and check your entitlement Get your benefit decision in writing and work out the last day you can start while keeping 150 days of entitlement.
2. Tell your caseworker early Raise the business plan in your first counselling appointment and ask which documents and expert bodies the office accepts.
3. Prepare the business plan and expert opinion Write the plan with financing and profitability forecasts and have its viability confirmed by a recognised body such as a chamber of commerce.
4. Apply before you start Submit the application before your self-employment begins, then register the business.
5. Request the second phase Near the end of month six, apply for the nine-month extension with evidence of business activity such as invoices.

Questions people ask

Can expats and non-EU citizens get the Gründungszuschuss?

Eligibility depends on your unemployment benefit entitlement, not your passport. If you receive ALG I and your residence permit allows self-employment, you can apply. Check the permit question with your immigration office first, because a permit tied to employment may need changing.

Is the Gründungszuschuss guaranteed if I meet the conditions?

No. The law says the agency may grant it, so it is discretionary. Your caseworker can refuse if they think you can be placed in a job quickly. A well-argued case for self-employment helps.

Do I need to write my business plan in German?

Plan for German. Appointments, forms and decisions are in German, and the expert body confirming viability will usually expect a German plan. Ask your agency in advance whether English documents are accepted.

Can I get the grant if I set up a UG or GmbH?

Yes, if you count as self-employed for social security. As a shareholder-director that generally means holding at least 50 percent of the shares or a genuine blocking minority. Minority shareholders without one are usually treated as employees.