Start-up Grant Germany: Gründungszuschuss Explained
Short answer
Germany's start-up grant, the Gründungszuschuss, is paid by the Federal Employment Agency to people on unemployment benefit (ALG I) who start a full-time business with at least 150 days of benefit left. For six months you get your previous benefit plus €300, then €300 a month for up to nine more. It is discretionary, so approval is never guaranteed.
Up to 15 months of support, tax-free and never repaid: for people losing a job in Germany, the Gründungszuschuss is the single most useful grant for starting without capital. It is also badly explained in English. Most expat forums mix it up with Einstiegsgeld, freelance visas or KfW loans, which are different things.
Here is what the law says, what the money is really worth in 2026, and where applications fail.
Who qualifies
The conditions are set out in § 93 of Social Code III. You must meet all of them:
- You receive unemployment benefit (Arbeitslosengeld, ALG I) and end your unemployment by starting a full-time business.
- On the day the business starts, you have at least 150 days of benefit entitlement left.
- An expert body confirms that the business is viable.
- You show that you have the skills needed to run it.
- At least 24 months have passed since any earlier start-up support ended.
“Full-time” in practice means at least 15 hours a week. Above that you are no longer considered unemployed under German law, so a side project does not qualify.
The 150 days catch many people out. With a 12-month entitlement, you have to start within roughly seven months of becoming unemployed. If the idea comes late in your benefit period, you are out of time.
Then there is discretion. The grant is a “may” benefit, not a right. The agency can refuse even if you tick every box, for example because it thinks it can place you in a job quickly. German social law gives placement into employment priority.
Non-EU citizens have one more step. Your residence permit has to allow self-employment. Permits tied to a job usually do not, and the employment agency cannot change that for you.
How much you get
The grant runs in two phases, set out in § 94 of Social Code III.
- Months 1 to 6An amount equal to your last ALG I payment plus €300 a month.
- Months 7 to 15On application, €300 a month, if you prove the business is active. This phase is discretionary too.
Source: § 94 SGB III
With a monthly ALG I of €1,400, the numbers look like this:
- Phase 1: 6 × (€1,400 + €300)
- €10,200
- Phase 2: 9 × €300
- €2,700
- Total over 15 months if both phases are approved
- €12,900
One catch is easy to miss. The six months of phase one are deducted from your remaining ALG I entitlement. If the business fails, you have that much less benefit to fall back on.
What €300 covers in 2026
The extra €300 is meant to pay for social insurance. As a self-employed person in Germany you pay health and long-term care insurance yourself, and public health insurers charge at least on a notional income of €1,318.33 a month in 2026, even if you earn less.
- Health insurance 14.6 % of €1,318.33
- €192.48
- Average additional contribution 2.9 %
- €38.23
- Long-term care, childless rate 4.2 %
- €55.37
- Minimum monthly contribution
- €286.08
The 2.9 % average additional rate is the official 2026 figure; your insurer may charge more or less. Without sick pay the reduced rate of 14.0 % applies.
That leaves about €14. Pension savings, liability insurance and voluntary unemployment insurance are not covered. The last one is often worth it: founders can stay in unemployment insurance voluntarily and pay half the normal contribution until the end of the calendar year after the year they start, but the application must reach the agency within three months of starting. The full list of running costs is in the guide to self-employed costs in Germany.
Applying, step by step
Order matters more than anything. Start trading before you apply and the grant is gone.
- Raise it earlyTell your adviser at the employment agency and ask for the forms.
- Check remaining daysAt least 150 days of ALG I on the planned start date.
- Write the business planIdea, market, capital needs, financing, revenue and profit forecast.
- Get the expert opinionA chamber, professional body or bank confirms viability.
- Apply before tradingHand everything in before the business starts.
- Apply for phase twoBefore month six ends, with evidence of business activity.
The plan and the forms are in German, and so are the meetings. If your German is shaky, bring someone who can follow the details; misunderstandings about dates are the costliest mistakes here. Founders with a technical product often struggle to estimate development costs. Free technical first consultations, such as the one OnlineBuilders offers, can help make that line of the plan credible.
Working out the 150-day limit
The rule sounds abstract, but a calendar solves it. The agency counts 30 days per month of benefit, so a 12-month entitlement means 360 days.
| Step | Example |
|---|---|
| Benefit starts | 1 February |
| Entitlement | 12 months, i.e. 360 days |
| Must remain when the business starts | 150 days |
| May be used up at most | 210 days, roughly seven months |
| Latest sensible start date | End of August, earlier is better |
Leave at least four weeks of buffer. The application has to be complete before you start, and one missing document or a delayed appointment at the chamber easily costs two weeks. If a sanction period has already cut your entitlement, work from the shortened figure on your decision letter.
What the agency wants to see for phase two
For the nine months at €300 you need to show that you are actually running the business as your main activity. Client invoices, statements from the business account, a management accounts summary, VAT returns or client contracts all work. If the agency has well-founded doubts, the law lets it ask for a fresh expert opinion. Start collecting this evidence in month one.
The expert opinion on viability
The law names chambers of industry and commerce (IHK), chambers of crafts, professional chambers, trade associations and banks as typical expert bodies. Some start-up advisers are accepted too; ask the agency before you rely on one.
The expert body checks whether your plan can plausibly support you. Expect to hand over the business plan, a capital requirements plan and a revenue forecast. Some chambers charge a fee, so ask first.
Why applications get rejected
Most rejections come down to one of these:
- Too few days left. Under 150 days on the start date means no grant.
- Started before applying. If you are already trading, the business no longer ends your unemployment.
- Placement priority. The agency thinks a job is the likelier outcome.
- Benefit suspended. During a sanction period after quitting your own job, nothing is paid. A sanction for giving up work usually lasts twelve weeks and also shortens your entitlement.
- Doubts about viability. Despite the expert opinion, the agency finds the plan too thin.
You can file an objection (Widerspruch) within one month of a rejection. The agency then checks whether it used its discretion properly. That does not create a right to the money.
If the grant is not an option
People on Grundsicherungsgeld deal with the jobcenter instead and can apply for the jobcenter’s self-employment grant, Einstiegsgeld. Founders without either can look at a subsidised loan such as the KfW startup loan, though borrowing is a different risk from a grant.
Your next step: find the entitlement end date on your ALG I decision letter, count back to the date when fewer than 150 days remain, and set your start date well before it. Then book the appointment. Once approved, the practical side of registering a business in Germany takes about a day.
Step by step
- Tell your adviser you plan to start a business Raise it at your next appointment with the employment agency and ask for the application forms.
- Check your remaining benefit days Make sure at least 150 days of ALG I will remain on the day your business starts.
- Write a business plan with numbers Cover the idea, customers, capital needs, financing and a revenue and profitability forecast.
- Get an expert opinion on viability Ask a chamber of commerce, chamber of crafts, professional body or bank to confirm the plan is viable.
- Apply before you start trading Submit the application, the expert opinion and proof of your skills before the business begins.
- Apply for phase two in time Before the six months end, apply for the extension and show evidence that the business is active.
Questions people ask
Can non-German citizens get the Gründungszuschuss?
Yes, if they receive ALG I and meet the other conditions. Citizens of non-EU countries also need a residence permit that allows self-employment. If yours only allows employment, sort that out with the immigration office first.
Is the grant taxable?
No. German income tax law lists the Gründungszuschuss as tax-free, and unlike unemployment benefit it is not counted when your tax rate on other income is worked out.
Can I start part-time and keep my benefit?
Not with this grant. It only supports a main, full-time business that ends your unemployment. Working 15 hours or more a week in your business means you no longer count as unemployed anyway.
What if I am on Grundsicherungsgeld instead of ALG I?
Then the jobcenter, not the employment agency, is responsible, and the relevant support is called Einstiegsgeld. It works differently and is usually smaller.
