Start-up grants & Financial incentives for businesses in Germany

Start-up grants & Financial incentives for businesses in Germany

Germany offers fertile ground for the entrepreneur, with billions of euros being injected into schemes that promote research, innovation and investment. There are numerous grants, loans and financial incentives available for anyone wishing to start a business. Germans and foreign entrepreneurs alike are welcome to apply for financial support.

Public funding in Germany can broadly be divided into four main groups:

  • Reduced-interest loans
  • Guarantees
  • Equity capital
  • Direct grants

Reduced-interest loans for businesses in Germany

The most common way that businesses are financed in Germany is through loans. This means that you borrow a sum of money through a lender according to certain terms and pay it back over a set period, usually with interest added on top. There are a range of different loans on offer to entrepreneurs:


Microloans, sometimes also known as microcredit, are small loans given to borrowers who typically lack collateral and would be otherwise unable to secure funding, to support entrepreneurship. 

Mikrokreditfonds Deutschland (Micro-Loan Fund Germany)

The Micro-Loan Fund Germany provides micro-loans to very small companies that would otherwise have no access to borrowing. It is aimed at small and young start-ups and companies, and people who are self-employed and pursuing a creative venture, with a particular emphasis on companies run by women or people from a migrant background, and companies that provide training to employees. 

Borrowing is usually done in small steps, with a small initial payment of between 1.000 and 5.000 euros. If the first loan is repaid over a period of six months, then the applicant can apply for a second loan. The total loan amount cannot exceed 25.000 euros. To apply, you can submit an application to a microfinance institution of your choice. 

Federal state public loans

Alongside the loans offered by the Micro-Loan Fund Germany, each German federal state has its own development bank, which provides loans of up to 10 million euros to small and medium-sized enterprises (SMEs).

You can see a full overview of the different start-up loans offered by the federal states in the digital funding database (Förderdatenbank - in German)

Federal promotional loans

The federal government’s promotional bank, KfW, also provides a range of promotional loans for start-ups and small businesses across Germany. To apply for a promotional loan, your first point of contact should be your regular bank. They can examine your application and then apply for the loan directly with the KfW on your behalf. 

ERP-Gründerkredit – StartGeld (ERP Start-Up Loan)

The ERP Start-Up Loan is available for young start-ups and firms that have been active for less than five years. It provides a maximum loan of up to 125.000 euros over five or 10 years, with the KfW assuming 80 percent of the credit risk. You don’t need to have any equity capital for this type of loan. 

ERP-Förderkredit KMU (ERP Development Loan for SMEs)

Intended for small and medium-sized companies and freelancers, the ERP Development Loan for SMEs offers up to 25 million euros in credit, with no repayments for three years and then a 20-year repayment term. To be eligible, your company must have fewer than 250 employees and an annual turnover of less than 50 million euros. 

KfW-Förderkredit großer Mittelstand (KfW Development Loan for Large and Medium-Sized Businesses)

Intended for investments and ongoing costs, the Development Loan for Large and Medium-Sized Businesses is intended for companies with at least 250 employees and an annual turnover of up to 500 million euros. It is a loan of up to 25 million euros. 

ERP-Digitalisierungs- und Innovations­kredit (ERP Digitisation and Innovation loan)

The ERP Digitisation and Innovation Loan is available to companies working in the areas of innovation and digitalisation during their start-up phase. It is intended for innovative projects and companies, for instance those developing new products or services, and those with above-average company growth or high investments in research and development. A loan of between 25.000 and 25 million euros is available. 

ERP-Mezzanine für Innovation (ERP Mezzanine Financing for Innovation)

The ERP Mezzanine Financing for Innovation is a loan of up to 5 million euros for the development of new products, processes or services. It is intended for businesses and freelancers that have been operating for at least two years, with a maximum annual turnover of 500 million euros. 

How to apply for a public loan

Your bank can contact the development bank for a loan on your behalf. You will need a business plan and sufficient loan securities. Having a German bank account also helps to smooth out the application process.

Public guarantees for German businesses

Public guarantees are a scheme adopted by the German government to encourage commercial banks to offer loans to companies. Under this scheme, public guarantee banks act as guarantors for those who have insufficient collateral for loans; i.e. they promise to repay the lender if the borrower defaults on payments.

Default guarantees (Ausfallbürgschaften)

Loan guarantees aid the process of businesses receiving loans from banks, making investment easier and less risky. In a nutshell, with a guarantee, the German federal or state government vouches for the liability of your project by providing loan collateral in the form of default guarantees. This makes it possible to finance projects that might be considered too “risky” for the bank on its own. 

The default guarantee covers up to 80 percent of the loan, with a maximum amount of 1,25 million euros. The loan can be used to finance investment or as working capital. 

How to apply for a guarantee

A guarantee application must be submitted to the guarantee bank or state development bank via your commercial bank.

Equity capital for new businesses in Germany

Equity or venture capital funding is a type of financing in which a business sells shares to raise capital. So for this type of funding you would be exchanging a stake in your business for money. 

Various public sources, on both a national and a regional level, provide equity capital for new businesses in Germany. The amount up for grabs is large: in the first two quarters of 2023, German startups raised more than 4,4 billion euros in venture capital. There are a few sources of equity capital funding in Germany worth mentioning:

Mikromezzaninfonds (Micro-Mezzanine Fund Germany)

To help small companies and start-ups find equity capital and access loans, the Micro-Mezzanine Fund Germany was set up in 2013. A micromezzanine investment provides a company with economic equity without the investor having any right to vote or other influence on the business (so-called “silent participation”).

The fund provides companies with venture capital of up to 50.000 euros over a 10-year period. Up to 150.000 euros (initial funding limited to 75.000 euros) is available for certain target groups, including companies that were founded out of unemployment, companies run by women or people from a migrant background, companies that train new employees. Social enterprises and companies with an environmental focus are also considered special target groups. 

The money is repaid in three equal annual instalments after the seventh year of operation. 

High-Tech Gründerfonds (HTGF - High-Tech Start-Up Fund) 

The High-Tech Start-Up Fund supports technology-based start-ups by helping them to find capital in what can be a highly complex, risky and capital-intensive market. It is intended for highly innovative and technology-oriented companies who have been in business for less than three years. To be eligible, businesses must have demonstrable research findings, be based in an innovative technology, and be positioned in a promising field. 

As well as advice and support, companies receive initial funding of up to 1 million euros, with a total of 4 million euros available for each company across all financing rounds. 

More than 400 companies have received assistance from the High-Tech Start-Up Fund since it was established. 

Direct grants for businesses in Germany

Direct grants are non-repayable cash payments granted to new businesses in Germany to offset initial set-up costs, promote research and development, or help build a company’s workforce. Here is an overview of some that are available in Germany:

Start-up grants for unemployed workers (Gründungszuschuss)

If you have lost your job and are receiving unemployment benefits, you may be entitled to a start-up grant to encourage you to take up self-employment. Job centres also offer seminars and courses to help prepare you for running your own business or becoming a freelancer.

To be eligible for the start-up grant, you need to be entitled to unemployment benefit for at least 150 days beyond the point at which you take up self-employment. Additionally, you must prove that you possess the necessary knowledge and abilities to run your own business, for instance by your qualifications or having attended a course. The start-up grant is not available to those above the statutory retirement age.

There are two phases to the grant. For the first six months, you are given the unemployment benefit you were previously entitled to, plus 300 euros per month. After this, you may be granted an additional 300 euros per month for a maximum of nine months, provided that your business has started to operate full-time.

To apply for the grant, you will need to submit an application to your local job centre. 

EXIST Programme

Higher education and research establishments are some of the most important sources of new technologies, innovative products and services, and so the EXIST programme cooperates with these institutions to provide a range of assistance for start-ups. 

Established in 1998, the EXIST programme encourages entrepreneurship among academics, motivating and qualifying students, graduates and academics to start up companies, and providing them with initial funding. 

Broadly, two different types of grants are available:

  • EXIST Start-Up Grant: A one-year grant for new businesses (up to 1.000 euros per month for students; 2.000 euros per month for technical staff; 2.500 euros per month for graduates; and 3.000 euros per month for people with doctorates), plus up to 30.000 euros for material costs and 5.000 euros for coaching.
  • EXIST Research Transfer: A grant to support challenging technical start-up projects at universities and research centres, first supporting product development and then set-up of a company. In the first phase, up to four jobs can be funded, as well as material costs of up to 250.000 euros; in the second phase, a grant of up to 180.000 euros is given. 

INVEST-Zuschuss für Wagniskapital (Invest Grant for Venture Capital) 

The INVEST programme helps young, innovative companies find funding and encourages potential investors to invest. Funding partners get 20 percent of their investment reimbursed, tax-free, if they invest at least 10.000 euros in start-ups, reducing the risk involved. 

Businesses can apply to the programme to get certified as eligible for INVEST funding, helping them stand out to potential investors and increasing their chances of obtaining venture capital financing. A company can receive up to 3 million euros each year. 

288 million euros of venture capital has been leveraged via the INVEST programme since May 2013. 


Coparion, a government-backed investment fund, provides funding for young and innovative companies, limited to 10 million euros per company over several financing rounds. 

GRW cash grants

The GRW (Gemeinschaftsaufgabe “Verbesserung der regionalen Wirtschaftsstruktur” - Joint Task for the Improvement of Regional Economic Structures) is a major investment programme committed to creating jobs and promoting regional economic development. It offers grants to businesses to cover up to 45 percent of their costs in the establishment phase. Under certain conditions, up to 90 percent of costs related to infrastructure may be covered. 

Funding is provided for: 

  • Investments that will create significant regional economic effects (for instance establishing a new business premises, expanding capacities, or modernising production processes)
  • Investments to make businesses more climate-friendly 
  • Investments to make an area more attractive (for example building new industrial or commercial sites, educational facilities, tourist attractions)
  • Investments in new energy infrastructure (until December 31, 2025)
  • Investments by small and medium-sized enterprises (SMEs) to strengthen competitiveness, innovation, digitalisation and ecological sustainability

How much is the GRW grant?

The amount of funding available is dependent upon the company’s size and location within Germany. Regions in Germany are allocated a maximum funding entitlement, based on their economic outputs. Most parts of eastern Germany, including Berlin, are classified as either "C" or "D" regions, while the vast majority of prosperous southern federal states such as Bavaria and Baden-Württemberg have no funding entitlement.

Maximum proportion of investment costs reimbursed

Region Small enterprises** Medium enterprises** Large enterprises**
C region* up to 35% up to 25% up to 15%
D region* 20% 10% Max 200.000 euros

*See a GRW regional aid map outlining regions, valid until 2027. In areas with a large population decline between 2009 and 2018, additional funding may be available. 
**Adhering to an EU-wide classification system of company size according to employee numbers, annual turnover and balance sheet totals.

How to apply for a GRW grant

Applications for GRW cash grants can be made with the state development bank in your federal state (Landesförderinstitut or Förderbank), who administer the cash grants as well as approving applications. You must submit your application before your project begins.

Search for additional funding opportunities

This is a brief overview of some of the kinds of business funding available in Germany. You can find a full list of funding opportunities in the digital funding database (Förderdatenbank - in German).

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