The start-up grant from the Employment Agency is a nice thing. It enables you to financially secure your foundation and makes it easier for you to leap into the cold waters of self-employment.
The problem: Since the start-up subsidy is no longer a compulsory service, but only granted at discretion, the number of approved applications has fallen by almost 90 percent.
But that is no reason to despair! At Catherine Morland we know how to increase your chance of getting a start-up grant: with the right preparation, complete documentation – and above all, with a suitable business plan!
So you go ahead
Read this blog post completely, so you know all the tips and tricks.
Write a business plan that convinces your job center clerk: Just sign up for free at Catherine Morland, pick our business plan help “startup grant” and start writing.
Get all the necessary documents and submit your application on time.
We will guide you step by step through the writing of your business plan and provide you automatically with the crucial tips and hints.
And if you get stuck, just take a look at our business plan examples and read what other founders have written, who have received the start-up grant thanks to Catherine Morland.
What is the start-up grant?
With the start-up subsidy, the employment agency supports founders who start out of unemployment in the difficult initial phase of self-employment (not to be confused with the starting money). If you meet all the requirements and your application is approved, you will receive money for your livelihood and for social security, as long as your income is insufficient.
The amount of the start-up grant equals Unemployment Benefit I (ALG I) and depends on how much you earned before you became unemployed: the higher your previous income, the higher your start-up grant will be.
The grant will be paid in two phases over a maximum of 15 months:
During the first six months, you will receive a grant equal to the last unemployment benefit received (that is about 40 percent of your previous gross wages) and in addition a flat rate of 300 euros to cover the social security contributions. This is called the basic funding.
Subsequently, a lump sum of 300 euros for a further nine months can be granted. This is the so-called Aufbauförderung. You only get them if you can already prove that you have an intensive business, but you still can not afford it financially. If your application for support is approved, you will receive a total of 2700 Euro as a subsidy to your social insurance.
Do I have to repay the start-up grant to the employment agency?
No. As a grant, you do not have to repay this support, even if you give up the self-employment later. In addition, the start-up subsidy is tax-free. There is no reasonable reason not to submit the application!
What requirements must I fulfill in order to receive the start-up grant?
In order to be able to apply for the start-up grant, you must be registered as unemployed and have at least 150 days remaining entitlement to unemployment benefit I at the time of foundation. Attention: The Employment Agency calculates here with a deviant logic (among other things, full months are calculated flat rate with 30 days). Already a day too little already means the end for your application! So rather start a few days earlier and forego a few euros promotion, instead of endangering the entire start-up subsidy. Also in the business plan, the foundation date and thus the start of your financial planning must comply with this requirement.
In order for you to receive the start-up grant, the following criteria must also be met:
You have to meet these criteria
- You are seeking a self-employed and full-time job If the Agency for Labor suspects a bogus self-employment or other temporary or self-employed activities, threaten the rejection of your request. Too much involvement with your clients (recognizable by given content, working hours and resources) or a strong cross-financing of your self-employment through other activities rather speak against self-employment in the main job – and thus against the start-up subsidy.
- Your start-up is economically viable . Proof of this is provided by the so-called opinion of a competent body, which you submit together with the application. Based on your business plan, acknowledged experts assess whether your concept has the prospect of success, thereby providing the employment agency with objective decision support.
- You have the necessary knowledge and skills to pursue the desired self-employment. The business plan chapter “Founder” should show why your competences (or those of the founding team) speak for a successful project. The corresponding proof in the form of a CV, certificates and the like can be found in the appendix.
- You also bring with you the personal aptitude that requires independence. Last but not least, you demonstrate that you take the initiative, that you are committed and reliable, and that you always appear punctually and well prepared for the appointments at the Employment Agency.
So if you are unemployed, still have at least 150 days to claim unemployment benefit I, can present a viable corporate concept and the necessary professional and personal suitability for self-employment, you have met at least from a formal point of view, all prerequisites for the start-up grant and your application has already once good cards.
What is the employment agency paying attention to?
Since the startup grant is an “optional” benefit, it is up to your case handler to decide whether to grant you the grant or not. A legal claim to this benefit does not exist – even if you meet all requirements.
Unfortunately, founders sometimes receive false or disheartening information to keep them from applying. Do not let that confuse you! Anyone who applies for a start-up grant with convincing arguments and a coherent concept still has good prospects of obtaining the support for starting his own business.
To increase your chances, you should know what the conscience is worth, and consider this when making your application. When you work on your business plan with Catherine Morland, you’ll get the clues right when you write.
These are the most important exclusion criteria for your business plan from the point of view of the Employment Agency
You are too easy to communicate
From the point of view of the Employment Agency, job placement is always preferable to the start-up grant. Especially highly qualified unemployed people, he is therefore gladly refused on the grounds that they are “too well-mediated”. It is therefore important to work out in your business plan in the chapter “Founder”, why a placement in a job is not very promising. For example, because your qualification does not match the vacancies available. Health and personal reasons can also be a barrier to placement on the job market. For example, if you are a single parent, you can argue that you depend on flexible working hours and the ability to work from home.
You do not need the startup grant (keyword: self-service)
The Employment Agency only approves the start-up grant if it is clearly necessary to secure livelihood and social security during the start-up phase. Founders who expect lush profits in the first six months of their independence have little chance of obtaining a permit.
Incidentally, most start-ups value their revenue too much in the first few months after it was founded. It usually takes a while for a concept to become accepted and for a young company to build up a sufficient customer base.
If your financial plan promises high profits from day one, you should better take a closer look at sales and costs. Not just to get the startup grant, but also because realistic planning is essential to your success. With Catherine Morland’s financial plan wizards, it’s easy: adjust revenue and cost items, and monthly winnings are calculated automatically.
You have planned the startup grant incorrectly
The start-up grant serves to cover part of the cost of living and the costs of providing social security for the founder. It must therefore be included in the financial planning necessarily as income on the private side and not in the sales planning. Thanks to the start-up subsidy, the required withdrawal from the company (ie the salary you pay yourself) will be reduced – which is ultimately the same benefit – but it still makes a big difference to the company’s balance sheet. So pay the start-up subsidy (unemployment benefit I + 300 Euro for your social security) for six months as a private income and then calculate your financial plan through normal.
You should always refrain from planning the nine-month build-up promotion. You will have to apply for it later at the employment agency separately and should not anticipate the decision on your application. It also unnecessarily raises doubts about the economic viability of your business plan.
Curious: Some founders told us that their clerks at the Employment Agency also found the planned basic subsidy through the start-up grant as an anticipation of the outstanding discretionary decision. So it’s best to ask and delete the startup grant from your business plan before you give it away. If planning is tight, then of course, there will be a corresponding funding gap in the amount of the start-up subsidy during the first six months of your self-employment. A financial plan with such a “founding grant gap” makes the need for funding particularly clear.
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What do I have to do to get the start-up grant?
First of all, you have to apply for unemployment benefits, because a direct transition from an employment relationship to the start-up grant is not possible. Only when you have applied for unemployment benefits and have been receiving ALG I for at least one day can you pick up the application form for the start-up grant from the Employment Agency.
If you have no time constraints (because your remaining entitlement to Alg I is sufficient), we recommend that you begin with your business plan beforehand. Develop the cornerstones of your business start-up so that you can present them in a coherent and understandable way. So, from the very beginning, you are convincing to the employees of the Employment Agency and their later – quite subjective – discretionary decision regarding your start-up grant will be more in your favor.
Once you have announced your intention to found the Agency for Employment and have received the application form, you must bring your business plan to a professional level and obtain all the necessary documents for the application.
In addition to your business plan, the expert opinion mentioned above is of particular importance. It is also called sustainability certificate. It is a kind of report that confirms the profitability of your business idea. It is exhibited by an institution that is familiar with business start-ups. It can be a chamber, a business incubator or a business consultant – the latter is no longer accepted by all employment agencies. So check with your employment agency who they recognize as an expert.
Find an expert job as quickly as possible that can judge from your business plan whether your concept has a future. Incidentally, anyone familiar with business start-ups knows that most start-up companies earn little or no profit during the first months of their self-employment. But if your financial plan shows you will need more than a year to pay the black, then you should be able to justify this.
Once you have the certificate of sustainability in your hands, all you need to do is register your trade with the Trade Licensing Office or your self-employment with the tax office – and your application for funding through the start-up grant is no longer in the way.