The start-up grant is one of the government’s most important tools for helping the unemployed start your own business. And of course, for some people the question arises: unemployed – what to do?
You can take advantage of funding, support and advice to get your business idea off the ground. But what are the rules, how much are the payments and how can you benefit? We’ll explain all this to you in our detailed articles on the topic of start-up subsidies.
The start-up subsidy is a support program and is one of the subsidies for start-ups, which is aimed at prospective entrepreneurs aged 18 and over who are currently receiving unemployment benefits (Arbeitslosengeld 1).
The Federal Employment Agency provides practical and financial support for people who want to start their own business. This support consists of a combination of business advice as well as a monthly allowance. The motto here: “Self-employment from unemployment”.
Before you apply for the start-up grant, you should apply for an so called AVGS voucher from your case worker. With this voucher you are allowed to take part in a professional start-up coaching at a certified management consultancy, like we are. During this coaching, one of our expert consultants will help you create your business plan and assist you in developing a strategy to turn your idea into a realistic, income-generating business.
This is how long the start-up subsidy is granted in the best case. These 15 months consist of two concrete phases:
For six months, you will receive a basic subsidy equal to your previous ALG 1 entitlement plus a monthly lump sum of 300 euros to cover social security expenses (these may be de facto higher or lower). The basic subsidy is included in the calculation of your health insurance contributions if you are covered by statutory insurance.
In addition to the basic subsidy, you can apply for a one-time extension of nine months. During this time, you will not receive the full subsidy, but you will still receive the lump sum for the health insurance contribution of 300 euros. The extension subsidy is not included in the calculation of your health insurance contributions.
Married founders with a child who have previously earned an income above the contribution assessment ceiling can receive up to 20,425 euros in start-up subsidies. Single persons without a child can receive up to 16,709 euros.
The start-up grant from the German Employment Agency is the perfect subsidy for job seekers who want to become self-employed – but in addition to all the advantages, there are also disadvantages.
Due to the opaque rules, some of our clients regularly wonder how to apply for a start-up grant and what to look out for. Here is a brief overview, provided you meet all the requirements for the grant:
Are you unemployed or affected by unemployment? Then you can apply for an voucher (AVGS) through the employment agency or job center. This gives you the opportunity to participate in an individual AVGS coaching by a certified consultant for professional reorientation or new orientation at no cost. This coaching can be used, for example, to work out your business idea and it accompanies you in the preparation of a business plan before you apply for a start-up grant. Depending on your needs and situation, you will receive the AVGS for 15, 20 or even more teaching units (UEs).
Although the start-up grant can be very useful for those who want to start a business, you should know that the program has some potential disadvantages. The first one is that you have to give up your unemployment benefits before receiving the start-up grant. Therefore, you should work closely with the advisors to make sure you are convinced of your business idea before taking this step.
You should also keep in mind that the subsidy in the amount of your previous unemployment benefit may not be enough to start your business. In this case you can check other financing possibilities and if necessary contact one of our consultants, because our service as a professional business consultant also includes financing advice.
Hartz IV recipients who want to start a business cannot apply for a start-up grant. In this case, the job center offers you a subsidy in the form of a start-up grant to support you on your way to self-employment. The introductory allowance is intended to support the start-up of a full-time, self-employed business.
Before starting their own business, Hartz IV recipients must apply for the introductory allowance from the relevant employment agency. This person supervises whether the new gainful employment is likely to ensure that you will no longer be dependent on ALG 2 in the future and whether the support is necessary for integration into the labor market. Consequently, it will be decided how long the subsidy will be paid and how much it will be.