Financing a startup in Germany: equity, grants, microloans

Calculating the capital need

Three blocks: investments such as equipment, software, website, fit-out, stock; business costs for the first six months in which revenue arrives but does not suffice: rent, insurance, marketing, tax adviser; and private needs for the same six months, because you cannot pay yourself at first. A freelancer with a laptop often only needs the private part, €15,000 to €20,000; a café with fit-out €80,000 to €150,000. The most common planning error is not the investment but the ramp-up: reckon with twice the time to break-even.

Equity and family

At least 20 percent of the need from your own pocket, because banks and funders require it and because own money is spent more carefully. Loans from family as subordinated loans with a contract, interest and term so they resemble equity and friendships survive. The emergency fund stays untouched; it is not startup capital.

Founder grant

Whoever founds out of unemployment and still has at least 150 days of entitlement to unemployment benefit can apply to the employment agency for the founder grant (Gründungszuschuss): six months of unemployment benefit plus €300 for social insurance, then nine months of €300. Requirements: business plan, viability certificate from the chamber of commerce, chamber of crafts or tax adviser, application before founding. There is no legal entitlement; whoever argues well against the placement priority has better chances.

Loans and guarantees

The KfW founder loan StartGeld finances up to €125,000 without equity through the house bank, with 80 percent liability release for the bank, rate in 2026 around four to six percent, up to two repayment-free years. The ERP founder loan up to €25 million for larger projects. State development banks have their own programmes. Guarantee banks of the states cover up to 80 percent of collateral if you have none. Microloans via the German microcredit fund up to €25,000 for micro startups, fast but with rates around 8 percent.

Grants and advice

Founder advice before founding is subsidised via the states, afterwards via the programme for entrepreneurial know-how with 50 to 80 percent of advice costs up to €4,000. For innovative startups EXIST for university founders with a stipend, the INVEST grant for business angels that refunds 25 percent of their investment, and digitalisation bonuses of the states. milinia’s subsidy finder shows what fits your situation.

Legal form and admin

Sole trader or freelancer to start: no costs, no balance sheet, cash-basis accounting, full liability. UG (limited liability) from one euro of share capital with a savings obligation, GmbH from €25,000, both with balance sheet, notary and trade tax but without private liability. Whoever has liability risks, seeks investors or wants to keep profits in the company chooses the corporation; whoever provides services alone stays a sole trader. From day one: business account separate from the private account, 30 percent of every receipt to the tax account, bookkeeping software, a tax adviser from the first year with VAT.