How to apply for Gründungszuschuss – and what is that even?

After working as employee for a while, the situation, that you lose or quit the job can happen. It may be unfortunate, but also it can be quite a big chance. Some people decide to take the chance and become freelancers and start their own business.

If you lost/quit your job and you need to know, how to navigate the whole situation about unemployment benefits, I will publish an article very soon.

This article you are reading now, will explain, how the government can financially help you to establish a business and become a self-sufficient freelancer.

Probably, you have heard about the mysterious Gründungszuschuss before, but it is pretty unclear, who can apply for it, which paperwork is needed and how it’s generally done. Here we are, the Ultimate English Guide to Gründungszuschuss!

What is Gründungszuschuss for Freelancers and Self Employed?

Gründungszuschuss is a form of financial aid from the Arbeitsagentur (employment agency), which you can receive, while you start your own business.

Who can apply for Gründungszuschuss?

If you are currently registered with the Arbeitsagentur and have received minimum 1 day of benefits already and have minimum 150 days of benefits left, then you are potentially eligible.

Do I have a legal right to receive Gründungszuschuss?

No, your case manager will decide, if you will receive it. One possible issue: There is the rule of „Vermittlungsvorrang“. That means, that if the chances are high, that you will find a well paid job in less than six months, or if there are lots of open positions in your field, then the chances aren’t too good to be eligible for Gründungszuschuss. The main concern of the Arbeitsagentur is always to get you back into work (= not receiving benefits anymore). And if your case manager is sure, that you will score a job before being a self sufficient freelancer, then you might be denied. 

How do I apply?

First of all, make sure, you business concept is valid and makes sense and make sure, that you really wanna become a freelancer/self employed and start your own business. Talk to some friends, talk to your family and get some advice on your project. If you are sure, that your concept makes sense and you wanna walk down that road, speak to your advisor at the employment agency and present your business to them verbally. Then they will decide, if they hand over the application papers to you and will let you apply. 

It makes sense to already have a business concept written down at that stage to make sure to be able to explain the project properly.

And now what? Which paperwork will I need?

  1. Main application form (from the Arbeitsagentur)
  2. Businessplan (including capital budget plan and finance plan)
  3. Revenue forecast (profit and loss account)
  4. „Tragfähigkeitsgutachten“ – this is an official paper, which accountants (and some other officially qualified places) can issue. They look over your business plan and answer a questionnaire, and give feedback, if they think your business can be successful.
  5. CV
  6. Business registration (to be done after speaking to your case manager)

How much money will I receive and for how long?

If the Gründungszuschuss will be approved, you will receive the usual amount of your unemployment benefits (which you have received before already) plus an additional sum of 300€ each month for the duration of six months.

After that, you have the possibility to extend the Gründungszuschuss for another 9 months. During this phase, you will only receive 300€ per month. Please note, that your business will be evaluated after the first phase and only if the evaluation has a positive result, you can enter the second phase of support.

What if I decide to quit freelancing after all? Can i go back to Arbeitslosengeld?

Yes, if that should happen, you will still be able to claim benefits for the amount of days, which you have left on your ALG. Example: If you in total were entitled to 12 months of ALG, applied for Gründungszuschuss right away and left freelancing after 8 months, you would have 4 months left.

What else do I need to know?

  • You need to have the plan to build up the business as your main job and have the prospective of sustaining your life through the business after 6 months.
  • Have a good (!) business plan, the right qualifications and be engaged in the business: hand over the papers on time always, have them filled in the right way, be excited about your business, show the Arbeitsagentur your passion.
  • Don’t neglect the „hard facts“: Work properly on your business plan and your finance plans. It’s crucial. 

I don’t speak German! Can I still apply?

Good news: Yes, Gründungszuschuss is not limited to German speakers and everyone, who receives ALG I has the right to apply. 

Bad news: The paperwork must be filled in in German (maybe, there are a few case managers, who accept papers in English, but I haven’t heard of any yet). Also the business plan and the finance plan must be translated to German.

Happy Freelancing 😀