Getting out of Unemployment with Self-Employment: The Gründungszuschuss
If you are facing unemployment in Germany or are right in the middle of it, you might be interested to know about a grant that the Agentur für Arbeit offers to job seekers on ALG1 unemployment benefits if they want to start a business in Germany. The idea of this “new business grant” (Gründungszuschuss) is to get people out of unemployment (ALG I) by encouraging them to become self-employed or to start a company. Naturally, this won’t suit everyone, so the Agentur für Arbeit is really interested in making sure that you’re the entrepreneurial type and that you have a viable idea before they approve your application.
It is difficult to find information about the Gründungszuschuss in English. Here are the basics.
How the Gründungszuschuss Works
Whether you intend to be a freelancer (Freiberufler) or self-employed (selbstständig) in a trade type of activity (Gewerbe), you can still apply. It is also possible to apply if you are forming a partnership under certain circumstances.
The first phase goes for six months and there’s an extension option for nine months after that. In the first phase, you’ll get your regular ALG I payments plus an extra 300 EUR flat fee. In the next nine months, if your application for an extension is successful, you continue to get the 300 EUR flat fee.
Are You Eligible to Apply?
You could be eligible to apply for this business grant if:
- You are currently receiving Arbeitslosengeld I, or you will be when you submit your application
- You still have at least a 150-day claim to Arbeitslosengeld I when you submit your application
- You haven’t been granted a Gründungszuschuss in the last 2 years
- You intend to work at least 15 hours a week (self-employment will therefore be your main occupation)
- You have had or will have difficulty finding traditional employment
- The establishment of your new business will end your period of unemployment
A side note: It’s OK if you have already been working on the side (nebenberuflich) as a self-employed person or freelancer while you were receiving ALGI, as long as it wasn’t your main occupation. (You didn’t exceed 15 hours a week).
- The application form (you can’t download it online! It has to come directly from your case worker at the Agentur für Arbeit)
- A strong business plan with a feasible concept
- Detailed financial documents such as a capital requirement plan, a revenue forecast and liquidity reserve. Information about your startup costs and ongoing expenses.
- A compelling reason why you are suited to self-employment
- A compelling reason why you need the grant (if you predict you’ll make tens of thousands within your first month of business, you probably don’t need it).
- CV, relevant qualifications and references
One thing that will really help you is a good relationship with your caseworker at the Agentur für Arbeit. They are the ones who give you the paperwork and the information, and they will make a recommendation once they’ve looked at your application. But regardless of whether your case worker is enthusiastic, dubious or downright hostile about your intention to start a business, they shouldn’t deny you the opportunity to apply if you’re eligible. So get the paperwork and get cracking.
Before you submit your application, you’ll have to get it checked for feasibility by a competent authority such as the chamber of commerce (IHK). You’ll also have to register your self-employment with the Finanzamt and maybe the Gewerbeamt (certain professions only).
If you want more detailed guidance, please let me know. Having received a Gründungszuschuss myself to start Red Tape Translation, I would be delighted to go through the paperwork with you in closer detail and give you lots of tips and anecdotal pearls of wisdom. I can also refer you on to top English speaking professionals who can help you hone your supporting documents and make sure they tick all the bureaucratic boxes.
Cheers and have a great weekend!