Startup funding Germany – a guide to funding opportunities

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Welcome to our startup funding Germany guide. We know it can be complicated to get the right investors and funding programmes for your exact situation. That’s precisely why we wrote this guide for you. There are tons of helpful programmes for entrepreneurs, startups, and people trying to make it. And we’re here to help you understand how the systems work and which ones might be relatable to your business journey.

Let’s dive right into it. We mainly differentiate between three kinds of startup funding programmes.

1. Consultation Grants

Consultation grants are a huge one, which most people are not even aware of. They are there to help you finance business consultation. One of the significant known grants is given by the institution called “BAFA“.

Who is eligible for the BAFA funding grant?

This fantastic grant focuses on three situations.

  • New Startups, not older than two years
  • Businesses after their third year of founding
  • Companies in economically difficult situations

While the first two situations are bound to a specific time-frame, the last one is not time-bound.

Todo quote design: Note: Your business must be officially resident in Germany.

What exactly can the consultation funding grant be used for?

There is a primary purpose for the BAFA grant. Roughly translated by their website, the BAFA states: “General consultation for all economic, financial, personal and organizational questions regarding corporate management.

They even go further to give you extra consultation support for special situations. Additional support includes businesses that

  • are led by women
  • are led by migrants
  • are led by entrepreneurs with disabilities
  • help the economic integration of employees with a migration background

How much does the grant cover?

Depending on your (future) company location and circumstances, the grant’s maximum amount can differ. The BAFA states these numbers as a general guideline as follows:

  • startups under two years can get up to 3.200€
  • businesses after their 3rd year can get up to 2.400€
  • businesses in difficult situations can get up to 2.700€

The exact amount depends on your region. Here’s a quick overview:

How do I know which consultancy I can reach out to?

Usually, most consultants who are officially approved by the BAFA have the BAFA logo on their website. That is a huge trust symbol. All consultants and consultant companies have to go through a challenging process to convince the BAFA of their qualification. As a proven BAFA consultancy, we can assure you, the process goes deep. It covers all the needed steps in a consultation, from planning to execution to final results.

How to apply?

To put it simply, you have to go through a specific process within a certain amount of time. Most companies have to go through an initial consultation talk with an officially approved consultation partner. And here’s the catch. You have to file your application within three months after your consultation talk. Otherwise, your application will be invalid.

If you need any help with setting it up the right way, don’t be afraid to reach out to us

2. Direct grants

Direct grants are probably the most lucrative type of startup funding support. To put it simply – direct grants are non-refundable cash resources. They are mostly given to new businesses in Germany to support starting costs. These include research costs, development costs, and employees’ salaries.

One of the most known grants here is the GRW cash grant.

Details about the GRW cash grant

The GRW cash grant exists to help businesses in the manufacturing and service industries. The primary purpose here is to reduce set-up costs significantly. To sum the GRW cash grant up briefly:

  • Supposed to be used for investments in fixed assets
  • Investment period of up to 42 months
  • Financing rate up to 30%
  • Focuses on business startups and existing businesses in the commercial sector
  • Can be used with other grants and financing measures

Note: The actual incentive’s amount granted varies from region to region.

What kind of support can businesses expect from the GRW grant?

As just stated, the GRW grant differs from region to region. According to the picture shown below, the higher incentive rate regions are mainly situated in Eastern Germany.

These regions might get up to 30 percent of eligible expenditures, at least for small enterprises. If you’re based around the border to Poland, you may even receive up to 40 percent funding.

To know the exact amount, you will either need to go through a consultation process or get an appointment at your local region’s relevant bank. Sounds harsh, right? But don’t worry, here are some good news! Gladly “GTAI” put this excellent graphic together. It might help you to know what to expect based on your region. Take a look here.

You can only apply for the GRW program if you haven’t started the investment project yet.

3. Research and development incentives

Here is a quick, but an important one. Research and development incentives. As the name suggests, these incentives are supported by the German federal government. They originate in the German federal government’s decision to spend around 3% of their gross domestic product on these named areas: funding research and development.

What does that mean for us?

If we look at possible funding programmes, we might notice that numerous programmes provide financial support for specific projects, based on research and development incentives. 

It might help you to differentiate between three types of incentives, as the R&D incentives target region-based.

  1. EU-wide incentives
  2. Federal government grants
  3. Federal state grants

As with the other so far mentioned grants, these incentives also differ in their amount based on region, business size, amount of other institutions’ involvement, and the kind of research you need support.

Note: Don’t underestimate these D&R Grants. 3% of the Gross domestic product amounts to approximately 70 billion EUR spending each year.

Tip: You can find an overview of each federal state funding institution in Germany right here.

4. Public Loans

Last but not least, Public loans. Public loans take a special place here in our startup funding Germany guide. They are provided by development banks, which results in having a huge benefit. Usually, these development banks can offer loans at significantly low-interest rates.

The most important federal government support programmes for people starting out in business: 

One fantastic example would be “the ERP-Startup Loan“, also called StartGeld in german. Offered by the KFW, and guaranteed by the European Investment Fund, the ERP Start-up Loan helps entrepreneurs and young companies with up to 100.000€ in fundings, up to five years after starting their businesses.

As stated before, public loans have significantly low-interest rates. The same goes for the ERP-Startup loan. The KfW goes even further and assumes 80% of the default risk, which results in easily accessible resources for new entrepreneurs.

To be even more specific, the interest rates currently stand at 2.05% for five years of maturity, and 2.70% for ten years.

To get more information and eventually apply for the ERP-Startup loan, please contact your local bank.

5. Which documents do you need to get one of these loans?

To give you further help in your preparations, here’s a quick summary of the usual candidates when it comes to documents you need to have.

  • A convincing business plan (click to get to our official business plan guide that focuses on the same areas we used to write an award-winning business plan.)
  • A well-written financial plan (click to get to our guide including all the sections you need, including investment allocation)
  • List of assets and debts, which should be in your financial plan
  • Tabular CV

If you’re having difficulties with any of these documents or don’t find a suitable funding programme here, don’t worry. We’re still here to help you.

Feel welcome to contact us and tell us about your situation. Don’t worry if you’re unsure if you should invest in any business consultants. We won’t push things. Fun fact: We’re officially part of the BAFA Consultation grant. You can get up to 4.000€ Euros financed in working with us. Or even up to 50.000€ Euros, if you’re a Berlin-based startup. Nothing to lose, right?

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