Anyone who is unemployed and who needs unemployment benefits can apply for a start-up grant. Just one day of unemployment would be enough for the funding. The grant is only granted to those who receive unemployment benefit 1; those who receive Hartz 4 are usually not entitled to it.
The start-up grant is an amount that can be up to 24,000 euros, it is still tax-free, does not have to be stated in the income tax return and it does not have to be repaid. In contrast to unemployment benefit, the start-up grant is not subject to the progression proviso in accordance with Section 32b of the Income Tax Act. The period of benefit is a maximum of 9 months from the day on which unemployment ended.
Basically, as a founder, you have no legal entitlement to a start-up grant. Rather, special requirements must be met here. A business plan plays a particularly important role in this context. After all, the responsible employees of the employment office are interested in how the sum of the subsidy should be invested. To be on the safe side here, it is almost always advisable to work with a start-up expert and get advice accordingly. This is the best way to avoid any pitfalls.
In order to be able to take into account all other requirements that are of interest in connection with the application for a start-up grant, it is important …:
- have been registered as unemployed for at least one day. Because: a seamless change from “employment” to “self-employment” is unfortunately not possible here.
- to be able to prove general entitlement to unemployment benefit. Here it is sufficient to show that you have used a job creation measure.
- Plan ahead and get in touch with the responsible employment office at an early stage so that the course can be set for the administrative and bureaucratic steps of the application.
- that independence is related to your skills as an applicant. Relevant training and professional experience are an advantage here.
- that you want to work as a full-time self-employed person.
- that you are entitled to ALG 1 for 150 days (or more) on the key date of the start of your self-employment.
- that you can present a load-bearing capacity certificate.
In some cases, the list of requirements can also be expanded to include participation in various seminars. And: if you have already received a start-up grant in the past, it must be at least two years ago.
In short: in order to receive the start-up grant, it is important to be active in advance and of course to convince with relevant skills. If you are unsure about this, the responsible clerk at the employment office is your first point of contact.
Do I get a start-up grant? The employment agency decides!
However, before 2011 significantly more and higher grants were paid because the Federal Cabinet decided on numerous cuts. It is now at the discretion of the Employment Agency to decide who receives a start-up grant and who does not.
Start-up grant without unemployment?
According to sportingology.com, many employees who decide to start a business do not know their personal entitlement to the start-up grant and for this reason forego the money. From their point of view, the termination of the previous employment relationship invariably leads to a blocking period of three months during which they cannot receive any unemployment benefit. After all, it is only possible to obtain the subsidy with the intermediate step of compensation.
However, if an employee’s notice of termination precedes the termination of the employment relationship on the part of the employer, there is no blocking period under the following conditions:
- The employment relationship was not irreversible
- Without the termination, the employment relationship would have been terminated at the same time for operational reasons.
- A severance payment between 0.25 and 0.5 monthly salaries per year of employment was agreed
If these conditions are met, the establishment can take place two days after the last paid working day. A single day between the entry into force of the notice of termination and the establishment of the new company is therefore relevant for unemployment benefits.
What are the requirements for a start-up grant?
Those who only worked for a short time and were unemployed in the meantime cannot apply for a start-up grant. The best conditions are given when self-employment is seamlessly linked to unemployment.
In order to get money from the pot, it is important that you are entitled to ALG 1 for at least 150 days between self-employment and the end of unemployment. For others who are only entitled to the money for 6 months, different rules apply, namely they have to decide quickly whether they want to go into self-employment or not. You only have 4 weeks to make a decision.