Your own savings, a subsidised KfW loan, a guarantee from a Bürgschaftsbank, a non-repayable grant, a business angel or crowdinvesting – new business owners in Germany actually have far more financing options than it seems at first glance. Here we look at which instruments exist and how to combine them sensibly.
For many people planning to start a business in Germany – especially internationals who have moved here recently and have not yet built up a credit history (Schufa) or a relationship with a local bank – financing is a particularly pressing issue. The good news: the German support system for new businesses has historically been designed to compensate for exactly this problem – a lack of collateral, a short credit history or little start-up capital.
According to the KfW-Gründungsmonitor 2026 (the annual study by the development bank KfW), the number of new business start-ups in Germany rose noticeably in 2025, with most still being started as a side business (Nebenerwerb) with relatively little start-up capital. This means that by no means every project needs a classic bank loan of tens of thousands of euros – but almost every founder should understand the full map of available instruments.
Equity: where all financing begins
Eigenkapital (equity) means your own savings, existing business assets or contributions from partners. Even a small amount of equity usually makes negotiations with the bank easier and reduces the burden of a loan. The German government’s start-up portal (Existenzgründungsportal) mentions an equity share of around 20% of the investment or more as a guide – but the exact figure always depends on the specific project, the industry and the requirements of the lender.
Personal savings and free reserves, existing equipment or business assets, contributions from co-founders, and so-called mezzanine capital (for example subordinated loans), which banks sometimes partly treat as equity. Loans from family and friends are formally debt capital, but in practice they often act as a bridge to your own funds.
Debt capital: bank loans and subsidised KfW loans
For projects with higher capital requirements, a bank loan remains the main source of debt capital. Because ordinary banks are cautious about young companies without a credit history, Germany has a system of state-subsidised loans through the development bank KfW. It works according to the so-called Hausbank principle: you do not apply directly to KfW but through your own bank or savings bank (Sparkasse), which assesses the project and passes the application on.
Loans of up to €125,000 per project, intended for start-ups and companies in the first five years after founding. KfW provides an 80% release from liability (Haftungsfreistellung) to your bank, which reduces the bank’s risk and makes approval easier. Repayment periods of up to ten years are possible, with an initial grace period without capital repayments. The interest rate depends on creditworthiness and market conditions and changes during the year – check the current conditions directly with your bank or on kfw.de.
For starting a business or taking over an existing company (Unternehmensnachfolge) with larger investments, there are additional subsidised KfW loans with amounts running into six figures, longer terms and sometimes full risk cover through a guarantee bank instead of a partial release from liability. These products are designed for projects with large investments – for example in equipment or buying an existing business.
| Instrument | Typical amount | Type | Particularly suitable for |
|---|---|---|---|
| ERP-Gründerkredit StartGeld | up to €125,000 | debt capital (bank loan) | small and medium-sized projects, first 5 years |
| Subsidised loans for larger projects | upper five-figure to six-figure range | debt capital (bank loan) | large investments, business takeovers |
| Guarantee from a Bürgschaftsbank | usually up to 80% of the loan amount | substitute for collateral | a viable project without sufficient collateral |
| EXIST-Gründungsstipendium | approx. €1,000–3,000/month + material costs | grant (non-repayable) | university projects, tech start-ups |
| INVEST – Zuschuss für Wagniskapital | grant of 15% of the investment | grant for business angels | innovative start-ups with private investors |
| Crowdinvesting | depends on the campaign, often €10,000–500,000 | equity/debt financing | projects with a strong community or brand |
Guarantees from Bürgschaftsbanken: solving the lack of collateral
Banks often refuse not because the business model is unviable but because there is not enough collateral – a particularly common situation for people who have recently moved to Germany. This is why every federal state has Bürgschaftsbanken – guarantee banks. They provide a guarantee to your bank, usually covering up to 80% of the amount that needs to be secured. The bank bears the remaining 20% or so of the risk itself, so it still has an interest in examining the project carefully. In most cases the application also goes through your bank, although some guarantee banks offer a direct route as well.
Above all, people with a convincing business model but insufficient personal collateral – such as property or substantial savings. The exact share of cover, processing fees and business plan requirements vary depending on the federal state and the guarantee bank.
Grants and scholarships: money you do not have to pay back
Besides loans, Germany offers a number of non-repayable grants; their availability depends on the target group and type of project.
Aimed at teams linked to a university or research institution – students nearing the end of their studies, graduates and (former) research staff. The scholarship usually covers personal living costs for up to twelve months (the amount depends on qualifications, often in the range of €1,000–3,000 per month, plus a child supplement), supplemented by a coaching budget and funds for materials and equipment. The programme is managed by Projektträger Jülich on behalf of the Federal Ministry for Economic Affairs.
If you receive benefits from the Agentur für Arbeit or the Jobcenter, also look at the Gründungszuschuss, Einstiegsgeld and other social support measures – more details in the section “State support while your business gets established” below.
Equity financing: business angels, the INVEST grant and venture capital
For fast-growing, often technology-based start-ups, equity financing is frequently more important than classic loans: private investors bring not only money but also experience, contacts and reputation – but in return they receive a share of the company.
Private investors (business angels) usually invest their own capital in young, innovative companies at an early stage. Through BAFA’s programme “INVEST – Zuschuss für Wagniskapital”, business angels can receive a grant of 15% of the amount invested (minimum investment usually €10,000) and, under certain conditions, an additional grant on profits when they later exit the investment. This reduces the risk for the investor and can make it easier for companies to access private capital.
If you bring in business angels or venture capital investors, you give up part of your company and often voting rights in its management as well. This can be a justified step, but check the terms of the contract carefully – in disputed cases together with a specialist lawyer.
Crowdfunding and crowdinvesting: financing through the community
Digital collective financing has become a notable additional instrument in recent years. In classic crowdfunding, the community supports a project in return for a reward (for example the product) or simply because they like the idea; in crowdinvesting, many small investors put in money – usually as subordinated loans – and receive a share of profits or interest. Besides the financing itself, a successful campaign often serves as an early test of demand: it shows whether the product or service really interests the market.
Microloans: small amounts with a big effect
For very small projects with limited capital requirements and no sufficient credit history, microloans were long an important instrument – above all through the nationwide Mikrokreditfonds Deutschland, which provided loans of up to about €25,000.
The federal government has decided to close the Mikrokreditfonds Deutschland as of 30 June 2026 – the reasons given include increased regulatory requirements, the need for budget consolidation and partial overlap with support programmes at state level. If you need a small loan, look specifically for alternatives – state development banks, cooperative microfinance institutions or private providers, as well as options via guarantee banks – because this segment of support is currently changing.
State support while your business gets established
In addition to instruments for financing the business itself, Germany has a number of social benefits that can support new business owners in the first, often financially unstable period. We have already looked at the main ones in detail:
- Gründungszuschuss from unemployment benefit ALG1 – for people starting a business while receiving ALG1.
- Einstiegsgeld while receiving Grundsicherungsgeld (formerly Bürgergeld) – support for getting a business established through the Jobcenter.
- Wohngeld for the self-employed and business owners – a housing allowance for people on a low income.
- Kinderzuschlag for the self-employed and business owners – additional support for families with children.
And if you are already an employer hiring people who are harder to place in work for personal reasons – for example because of limited German, which is particularly relevant for many international entrepreneurs hiring other professionals who have moved here – take a look at the Eingliederungszuschuss, a wage subsidy for employers.
How to plan your financing mix properly
In practice, a single instrument rarely works on its own – most viable financing structures combine equity, a subsidised loan, a guarantee if needed and, selectively, a grant. The basis for this is a careful financial plan as part of the business plan.
- Assess your capital requirements realistically: investments, start-up costs and a liquidity reserve for the first months.
- Prepare a revenue, cost and profitability plan to prove the viability of the project to a bank or funding body.
- Take a sober look at your equity share and possible collateral before negotiating with the bank.
- Consider several sources of financing in parallel rather than stopping at the first option.
- Keep deadlines in mind: many grants and subsidised loans must be applied for before the business starts, not afterwards.
Common mistakes when looking for financing
Applying for a grant too late, underestimating capital requirements without a liquidity reserve, assuming you can get a loan without talking to your own bank, and the mistaken belief that equity financing is “free”, when in fact it costs a share of the company and voting rights. In practice, missing deadlines – for example applying after rather than before the business starts – often leads to support being refused.
Frequently asked questions
Do I have to have equity to start a business?
In most cases it is not a formal requirement – small subsidised KfW loans such as StartGeld are in principle available without equity. In practice, however, having your own funds often makes loan approval easier and improves the terms.
Can several financing instruments be combined at the same time?
Often, yes – many projects combine, for example, a subsidised KfW loan with a guarantee from a Bürgschaftsbank, equity and additional social benefits. Whether benefits are offset against each other or exclude each other depends on the specific situation and the legal basis – check this in advance.
What should I do now that the Mikrokreditfonds Deutschland is closing?
The fund closes as of 30 June 2026. If you need a small amount, look specifically at alternatives – state-level support programmes, cooperative microfinance institutions, private microloan providers and offers from guarantee banks – as this segment of support is currently changing.
How reliable is crowdinvesting as a way of financing?
Like any form of equity participation, crowdinvesting involves both opportunities and risks – for investors as well as for the founders themselves: there are costs and transparency requirements, and you need to know what share of the company or which repayment obligations arise. Study the terms of the specific platform and contract carefully.
“The best financing is not the one that looks cheapest on paper, but the one that matches the real capital requirements, risk appetite and pace of the specific project.”
Which combination of equity, subsidised loan, guarantee, grant or equity financing suits your project depends on many individual factors. If you want to understand how these rules apply to your personal situation, or you are planning to start a business in Germany, get in touch: in a personal consultation or one of our education programmes we will work through your situation together and help you avoid costly mistakes.
Book a consultationLegal notice: This article is for general information and educational purposes only and does not replace individual legal, tax or financial advice or investment advice. It is not a financing recommendation for any specific case. The conditions of state support and loans, and the legal rules, may change and differ depending on your personal situation, the federal state and the bank. Vitavia Akademie provides educational content and practical support but does not replace advice from a tax adviser, a lawyer, a bank or the relevant funding body. Before making important financial decisions, check the current conditions with the relevant bank or authority and, if necessary, seek individual advice from a qualified professional. See also: Impressum and Datenschutz.
Sources
- KfW-Gründungsmonitor 2026 – kfw.de
- KfW: ERP-Gründerkredit StartGeld – kfw.de
- Existenzgründungsportal (BMWK start-up portal): section “Finanzierung und Förderung” – existenzgruendungsportal.de
- Existenzgründungsportal: section on collateral, guarantees and rating – existenzgruendungsportal.de
- BAFA: INVEST – Zuschuss für Wagniskapital – bafa.de
- Projektträger Jülich: EXIST-Gründungsstipendium – ptj.de
- Förderdatenbank des Bundes: Mikrokreditfonds Deutschland – foerderdatenbank.de
