ALGII and Einstiegsgeld – a government grant to start your business

ALGII recipients, you can get extra financial support from the JobCenter to start a business or take up a part-time job. That’s on top of the payments you’re already getting. The programme is called “Einstiegsgeld”.

Grants (Zuschüsse) don’t need to be paid back. Einstiegsgeld is similar to the Bundesagentur für Arbeit’s government grant for recipients of ALGI, called the Gründungszuschuss. While the Gründungszuschuss is specifically designed to support the self-employed only, Einstiegsgeld can also be used to take up a part-time employment contract.

Another important difference is that you don’t need to have a certain number of days remaining on your claim to benefits to apply, unlike the Gründungszuschuss. Plenty of people who don’t get around to applying for the Gründungszuschuss before time runs out go for Einstiegsgeld instead, once they change from ALGI to ALGII.

Don’t know the difference between ALGI and ALGII? We explain it here.

If you are on ALGII and you’re considering going freelance, expanding your freelance side gig or taking up a part-time job that doesn’t quite cover your living costs (not a minijob), talk to your case worker at the JobCenter about Einstiegsgeld.

Am I eligible for Einstiegsgeld?

• You can get it if you start a business, including as a freelancer, as long as you’ll be working more than 15 hours a week.
• You can get it if you have a freelance side gig (< 15 hrs/wk) that you wish to make your main occupation (> 15 hrs/wk)
• You can get it if you have been offered an employment contract that pays a reasonable amount (e.g. it is not exploitative and pays at least minimum wage) but doesn’t quite cover your living costs, as long as you’ll have at least 15 working hours per week
• You can get it if your caseworker thinks that this will result in the end of benefits long-term (this is generally at their discretion)

But…

• You cannot get it for a minijob
• You cannot get it if the job you plan to take up will cover your living costs (and those of your dependents) adequately.
• You won’t get it if it looks like you’ll be so profitable straight away that you won’t actually need it.

How long does it last?

Einstiegsgeld gets approved for 6 months at a time. The longest period of time for which you can receive Einstiegsgeld is 24 months.

How much will I get?

You need a degree in rocket science to figure out how much you will receive. The exact amount is up to your case worker. But here is a rough idea:

You usually get your regular ALGII payments to cover your living costs plus an extra flat-fee amount of up to 216 EUR per month. More is possible in certain, more extreme scenarios. At the upper limit, you can expect ca. 350 EUR per month (in addition to what you’d normally get without Einstiegsgeld).

Here’s an example: you’re single and you live alone. You haven’t been on benefits for very long. The Job Center is currently covering your rent (800 EUR per month), your public health insurance contributions (they pay this directly to your health insurance provider), you’re exempt from paying into the pension while on ALGII and they give you 432 EUR per month to buy, you know, food and stuff. You convince your caseworker that you’re on the right track and they want to give you the maximum possible amount of Einstiegsgeld. 

For the first six months, you’d get:

• Your rent paid: 800 EUR
• The regular monthly payment to cover food and other expenses: 432 EUR
• Einstiegsgeld: 216 EUR
• Your health insurance paid (you don’t see that money directly).

You would see 1,448 EUR in your bank account each month for six months while you run around starting up your business.

Disclaimer: this is just an example! I don’t have a degree in rocket science. (Nor does your case worker, by the way).

Wait, what about the money I earn from the business?

Yeah, this gets offset. The first 100 EUR per month is yours to keep. After that, you get to keep a small percentage of your earnings and the rest is offset. This is another area where you need a degree in rocket science to figure it out.

Here is an example:

• You make 300 EUR profit per month from your freelance work.
• You keep 100 of this.
• You then keep 20% of the 200 EUR remaining (40 EUR)
• Your monthly payment gets reduced by whatever is left over (in this case, 160 EUR).

Don’t be angry about that. You’re making a profit from freelance work! Go celebrate.

OK, It’s better than a slap in the face with a cold fish. So how do I apply?

1. Tell your case worker at the Job Center about your business or show them your employment contract. Ask for the Einstiegsgeld application form. Ask him/her exactly what you need to provide. It’ll be case-specific. You might need a business plan if you’re going to be self-employed.
2. Write a business plan if you’re going self-employed and your caseworker has said you need one. Yes, it needs to be in German and no, Google Translate is not good enough. We can help with that.
3. If your case worker can’t assess the feasibility of your plan on their own, they might also ask you to get an expert feasibility assessment (fachkundige Stelle) and they’ll cover the costs for you. But you already know whether you need one of these or not, because you asked your caseworker in Step 1.
4. Submit your application and supporting documents to your case worker at the JobCenter.

I want to start a business, but this business plan thing seems like a lot of work for a small amount of money.

A lot of people shy away from this because the application seems so hard. Sit down and work out how much money you’re missing out on if you don’t apply.

Let’s say you get the average amount of money extra per month (216) for the maximum amount of time (24 months) because it takes a while to get your business up and running to a point where you can actually cover your living costs. That’s up to 5,184 EUR you might miss out on if you don’t apply. Even if it only takes 6 months to get set up and then you’re no-longer in need of benefits because you’re profitable, that’s up to 1,296 EUR. Plus, you’re profitable! Yay! Maybe self-employment wouldn’t have been possible without Einstiegsgeld. Even if you spend 100-200 EUR writing and/or translating a business plan, there’s still 800 EUR left over. How risk-averse are you? Do you have dependents? Einstiegsgeld does mitigate the risk of starting a business somewhat. And if it doesn’t work out? You go back on ALGII.

How can Red Tape Translation help?

If you need a business plan and you want to write it yourself, we can translate it from English into German. Send it to us and we’ll get you a quote. If you want to retain complete control over what it says and you weigh your words carefully, this is a good option, especially if you’ll need to use it later to apply for loans or other grants.

Use Life Admin to communicate with the Job Center. We can help you craft emails, make phone calls, fill out forms or applications. If you’re on ALGI or II or you’re a student, you’ll get a reduced price.