Here's how to do it
10 Steps to Getting a Startup Grant
You want to start your own business and, ideally, take advantage of financial support in the form of a startup grant, which will allow you to have some financial security, at least for the first six months. However, applying for the startup grant—and actually getting it approved—requires some work and careful consideration.
That’s why we’ve put together a short “travel guide or manual” below that can serve as a guide and resource for you. There are certainly other ways to qualify for the startup grant, but the approach described below has proven successful in 95% of cases in the past.
Bruno Schäfer
Do you have a strong desire to start your own business, but feel overwhelmed by all the processes, details, and paperwork?
Register as Unemployed
This means that if you want to apply for the startup grant, you must be unemployed and not yet self-employed as your primary source of income.
While receiving unemployment benefits, it is possible to work as a self-employed person on a part-time basis. If you choose this option, the following conditions apply: You may work a maximum of 14 hours and 59 minutes per week (which you bill to a client) and earn an additional €165 (profit). Anything beyond that will be deducted from your unemployment benefits.
To apply for the startup grant, you must convert your business from a side business to a primary business on the day you submit your application.
In addition, it’s important that you’re eligible for Unemployment Benefit 1. This is the case if you have worked full-time as an employee for at least 12 months in the last 24 months. It doesn’t matter how many employers you’ve worked for, and the 12 months do not have to be consecutive.
12 months means 12 months of eligibility for Unemployment Benefit 1.
Tip: It’s best to have your current employer terminate your employment in order to avoid a waiting period. Experience also shows that the employment office is more willing to support you on your path to self-employment if you were laid off than if you resigned on your own.
Apply for Unemployment Benefits 1
First, you register as a jobseeker and then register as unemployed. As soon as you have registered as unemployed, you must go to the unemployment office on the first day of unemployment (sometimes online) to apply for your unemployment benefit 1.
As a rule, your details will be recorded at an appointment on site and a few days later you will receive a positive approval notice by post stating that you are entitled to unemployment benefit 1 from day X.
Meeting with the Employment Agency
You’ll usually receive an invitation by mail or email, and the interview will then take place during a follow-up appointment in person or over the phone.
During this interview, the employment counselor will ask you why your last job ended and how he or she can help you get back to work.
Now it’s your turn:
If you’re sure you want to start your own business, this initial meeting is already the right time to clearly state your position.
You should come up with good reasons why self-employment is currently a more promising path than returning to a salaried position.
Now is also the right time to mention that, as you embark on your journey toward self-employment, you would like to take advantage of funding from the Employment Agency in the form of an AVGS voucher for individual startup coaching and, subsequently, apply for the startup grant.
Coaching Gift Certificate
If you’ve been able to convince your employment counselor of your plan, you should usually find the appropriate voucher in your mailbox within the next few days. You can then activate it together with your coach and start the coaching session right away.
Request Received
Once the coaching has begun, you can also ask your employment counselor, after submitting the official application for the startup grant, to have it sent to you by mail. You can then fill out the application together with your coach at the appropriate time.
Preparation with Your Coach
Coaching is the perfect way to help you prepare for self-employment. Together with your coach, you can create your own personalized learning plan from a list of topics (such as taxes, business registration, online marketing, business plan development, market research, etc.).
Following this, there will be ongoing dialogue and knowledge-sharing—scheduled at times tailored to your needs—covering all topics relevant to you and your startup. The coach also serves as a “sparring partner” to challenge your ideas and suggestions.
Creating Documents Together
Your coach will also help you prepare the documents for the start-up grant application. Whether it’s the business and financial plan, the CV or the general structure of the “application folder”, the coach will use their experience to ensure that everything is in order and the result is highly professional. The correct and properly prepared documents are decisive for the approval of the start-up grant. This is where most mistakes are usually made.
Have Your Business Idea Reviewed
Once the coaching is complete and all documents have been prepared, they must be reviewed by a qualified authority to assess their viability. The competent authority can be your tax advisor, another business consultant, or even the Chamber of Industry and Commerce (IHK). To make its assessment, the competent authority typically needs the final business plan, your resume, and two pages from the official GZ application.
Submit all required documents
The official GZ application must be submitted in writing. In theory, you can also submit all other documents later (up to three months). Experience shows that it’s generally better to submit all documents together, essentially as an “application portfolio.”
We recommend that you put everything in an A4 envelope and either drop it directly into the mailbox at your local employment agency or hand it to the receptionist (to get it stamped as received) to make absolutely sure that everything is received. (These days, the application can often be submitted online as well, depending on how tech-savvy your employment counselor is.)
Day X—that is, the day you decided to become a full-time self-employed person—should be the day when…:
- The coaching is complete
- All documents are complete
- There are still at least 150 days of remaining entitlement to ALG 1
- The date on which you filed your business registration or tax return (depending on whether your venture is a business or a freelance endeavor) is exactly this day.
Keep your fingers crossed
The simplest—yet at the same time most difficult—step is to wait and see.
After all, you’re almost there. With your coach’s help, you’ve submitted a perfect “application package,” and the coaching has prepared you perfectly for your new business. Now it’s time to keep your fingers crossed and hope that the startup grant is approved.
