Start-up grant: 7 common mistakes when applying for it

The start-up grant or Gründungsstipendium is an attractive support program that can help you start your own business while you are unemployed. However, applying can be challenging and take a long time. We show you what the 7 most common mistakes are.

Avoid these 7 mistakes when applying for the start-up grant.

“Unemployed – what can I do now?” Anyone who is unemployed and receiving unemployment benefits can apply for a start-up grant. Only one day of unemployment is enough to get the start-up grant, provided you do not make any negligent mistakes. However, the subsidy is only granted to people who receive unemployment benefit 1. People who receive Hartz IV are generally not entitled to it.

In order for the application for the start-up grant to go off without a hitch and for you to be granted funding, specific mistakes should be avoided. Below you will find the 8 most common mistakes when applying to the Employment Agency – from the practical point of view of an experienced business consultant.

01

The conditions for the start-up grant are not met

The start-up grant is awarded by the German Federal Employment Agency (Agentur für Arbeit). Anyone who is planning to become self-employed and would like to take advantage of the subsidy should find out exactly what the basic requirements are for applying and make as few mistakes as possible.

The following conditions should be met:

You must be registered with the employment agency.

You should be entitled to ALG 1 and be registered as unemployed for at least one day.

Accordingly, it is not possible to immediately switch from being an employee to starting a business and apply for a start-up grant. Read more in our article: Gründungszuschuss beantragen step by step or Gründungszuschuss: This is what matters when applying.

02

Executive Summary

Priority of placement according to § 4 of the Social Code III means that the case workers at the employment agency should by law give priority to placement for training or an open job before any benefits for active employment promotion are provided (e.g. start-up subsidy). Therefore, if you have good chances on the labor market, it tends to be more difficult to get an approval for the start-up subsidy.

In such a case, it is of particular importance that you explain plausibly to the employment agency why your professional situation would be extremely improved by starting a business. And if you are asked to write applications, you should definitely cooperate instead of arguing.

03

Deadline on 150 days remaining entitlement is not met

In order to apply for the start-up grant without errors, you must still be entitled to at least 150 days of unemployment benefit 1 and have been unemployed for at least one day (at the time of application). The day on which you register your full-time self-employment with the Trade Licensing Office (foundation date) is used to calculate the remaining entitlement. In most cases, proof of this is provided in the form of a trade license.

By the way: If you do not have 150 days remaining entitlement for unemployment benefits, you can apply for an activation and placement voucher apart from that. Through the AVGS, you will receive free support from us in planning your business. We only bill the employment office and there are no consulting costs for you. At our Cologne location, we offer comprehensive AVGS coaching with certified consultants.

04

Note the date of application – start-up grant

The following happens to many founders: After they slip into unemployment, they unceremoniously decide to apply for the start-up subsidy. “But what business idea do they have?” most of them ask themselves.

After some time of thinking back and forth, they come up with a suitable business idea. As it happens, the idea starts to grow and they want to start their own business. Some founders are full of drive at this point, go to the local trade office and register their company immediately.

Still unemployed, but already self-employed, they visit the employment agency a few days later. They talk to their case worker and tell him that they are very motivated to escape from unemployment and have already registered the company – they would now like to apply for the start-up grant. However, the case worker immediately shakes his head and says somewhat matter-of-factly, “Unfortunately, you can’t apply for the start-up subsidy now because your company has already been registered.” When the founders leave the building of the Employment Agency after this rejection, we usually get the first call from you. However, do not worry. Even if you have already started your main business before you even have the application for start-up subsidy in your hands, we will be happy to help you solve the problem. All you have to do is contact us.

05

Time for the preparation of a business plan is too short

Anyone who wants to apply for the start-up grant must face the challenge of “creating a business plan”. This is because the business plan is the basis for deciding whether the business model is sound and whether it has a chance of being founded with the start-up grant. The most common reason for a rejection of an application for a start-up grant is a faulty or incomplete business plan. The following articles will help you to create your own business plan:


Create your own business plan – step by step 6 professional tips for the perfect business plan
Business plan checklist for founders The business plan should be peppered with competencies so that a certificate of viability can be easily obtained. It is also important that the business plan is detailed and that each part is described in detail so that it does not fall on deaf ears at the employment agency.

Do you need a certificate of viability or an expert opinion? We will be happy to help you. – Free consultation hour

06

The business idea is not sustainable or was poorly researched

“An idea is not yet a company, merely a beginning.” – Company work

As business consultants, we sometimes get to the point where we read through the business idea in a business plan and realize that the potential startup person doesn’t know exactly what to look for in the wording.

A business idea must be implemented – mentally – in a fictitious company in order to simulate whether the idea can be implemented as a business. At the same time, the competition should be researched and the overall market considered. This can be achieved by the following considerations:

  • How does the product control work?
  • Is this easy to use?
  • What are the distribution channels?
  • What is the competitive situation?
  • What are the manufacturing costs of the product?
  • At what price do we sell it?

Of course, these questions are not complete, but they are a first theoretical step towards the company. It also helps founders understand what they’re up against when they move from an idea to a real product in the real world.

07

Documents are not complete

To ensure that the grant is successful, founders should pay particular attention to the completeness of the application. The form for the start-up subsidy is only handed out by the employment agency during a personal consultation on the start-up subsidy. This form must then be filled out and sent to the person in charge. Adjacent alternative documents must be submitted. These are:

  • Business plan
  • Resume
  • Proof of registration of self-employment
  • Testimonials
  • If applicable, the mandatory permit or approval for the respective
  • Professional sector
  • Expert opinion

Apply for start-up subsidy step by step with the help of a free counseling session

We recommend that you first discuss the start-up subsidy with us as a start-up consulting company, then talk to the administrator about the subject. This is followed by the application, which you obtain from the employment agency, and finally the business registration. However, it is imperative that you pre-date this so that you still have enough time to prepare the business plan and complete the application. We will accompany you throughout the entire process.