A frequently asked question is: How much does it cost to start a new business or to become self-employed in one of the liberal professions? There is no one-size-fits-all answer to this question. The costs can vary greatly based on your line of industry, choice of legal structure and business model. Use our business plan template to get an accurate estimate of your capital requirements.
A selection of financing and funding sources for Munich based entrepreneurs
If equity capital and support from family or friends are not sufficient, third-party financing and funding programs may be an option. These funding programs offer low-interest loans, equity capital or grants. In principle, the financial backer or institution determines the conditions under which you can receive financing or funding. There is no entitlement to support. Get in touch at an early stage before you make a financial commitment, such as signing contracts or purchasing equipment. In addition to the chance to win prize money and non-cash prizes, startup competitions also offer you expert feedback on your business model, media attention, the opportunity to exchange ideas with like-minded people and important contacts, including your first orders.
You can apply for a bank loan from a bank of your choice, the so-called Hausbank. Check the services and conditions of different banks. Whether you are granted a loan depends largely on how the bank assesses your creditworthiness. For example, personal skills, financial reliability, and the prospects of your business are assessed. But also, whether the risk of defaulting on the loan is acceptable to the bank. If you are unable to repay the interest and principal, banks require collateral.
Your business plan is the most important basis for the bank when deciding whether to grant you a loan. You should therefore make sure that you present a complete and well-developed business plan at your first visit to the bank!
Practical advice: Equity always affects the credit rating. Ideally, equity should amount to at least 20 to 30 percent of your overall capital. Surveys indicate that “insufficient securities” and “too little equity” are the most common reasons why banks reject a loan application. Without equity, there is a high risk of running into immediate payment difficulties in the event of unforeseen costs or delays in the start-up phase.
As a rule, standard bank collateral is also required for promotional loans, as here too the principal bank (Hausbank) is at risk vis-à-vis the promotional bank. And experience shows that the amount of the loan plays a role. For small commercial loans of up to 10,000 or 15,000 euros, the return for the Hausbank is often too low.
Important: Contact the bank at an early stage and apply for a loan before you make any financial commitments, such as signing contracts or purchasing equipment.
More about the bank loan financing option Gründerplattform
The promotional programs of LfA Förderbank Bayern and KfW Förderbank are primarily directed at private individuals who want to start self-employment in Germany. The main place of residence must be in Germany. LfA and KfW promotional banks are publicly owned and organized banks that exist at the national and state level.
Subsidized loans have many benefits, including reduced interest rates and often a grace period. However, you always apply for these subsidized loans like a normal bank loan via your commercial bank (Hausbank).
In principle, the commercial bank (Hausbank) bears the credit risk for subsidized loans. It therefore generally requires its customers to provide the usual bank collateral. If this collateral is not sufficient, LfA Förderbank Bayern offers options for partial risk assumption in the form of indemnities, sureties or guarantees.
Book a free appointment with LfA Förderbank Bayern and talk to an expert on the phone, in a video or a in person meeting.
Your business plan is the most important basis for the bank when deciding whether to grant you a loan. You should therefore make sure that you present a complete and well-developed business plan at your first visit to the bank!
Practical advice: Equity always affects the credit rating. Ideally, equity should amount to at least 20 to 30 percent of your overall capital. Surveys indicate that “insufficient securities” and “too little equity” are the most common reasons why banks reject a loan application. Without equity, there is a high risk of running into immediate payment difficulties in the event of unforeseen costs or delays in the start-up phase.
As a rule, standard bank collateral is also required for promotional loans, as here too the commercial bank (Hausbank) is at risk vis-à-vis the promotional bank. And experience shows that the amount of the loan plays a role. For small commercial loans of up to 10,000 or 15,000 euros, the return for the Hausbank is often too low.
Important: Contact the bank at an early stage and apply for a loan before you make any financial commitments, such as signing contracts or purchasing equipment.
The Federal Government has used this fund to establish a nationwide system for the allocation of micro-loans in Germany to respond to the financing needs of small businesses and business starters. The promotional program Mein Mikrokredit offers funding of up to 25,000 euros in the form of a loan. The economic viability and creditworthiness of the business owner or founder are the key criteria for deciding whether they will be supported by a microloan. They apply for the microloan at a microfinance institution that is a contractual partner of the German Micro-loan Fund.
Important: Contact the bank at an early stage and apply for a loan before you make any financial commitments, such as signing contracts or purchasing equipment.
Bank requires standard collateral to grant a loan. If borrowers are unable to provide sufficient collateral, public guarantees can replace or supplement any shortfall in securities. The public guarantee banks of the federal states in Germany are able to issue guarantees to new or established small and medium-sized companies. In general, the usual route to public guarantee is via the commercial bank (Hausbank), which finances your business.
- If you are planning to set up a business in the trade, skilled crafts, hotel and restaurant, gardening or landscaping sectors contact Bürgschaftsbank Bayern.
- All other sectors are covered by LfA Förderbank Bayern.
In addition to or as an alternative to a bank loan, you can seek equity capital in the form of investments. Investors contribute equity capital, also known as venture capital. These can be private investment companies, venture capital companies or business angels. Business angels are private individuals who provide capital and what is usually many years of management experience.
BayernKapital is the public venture capital company of the State of Bavaria. They address Bavarian high-tech start-ups and scale-ups looking for start-up and growth capital.
In Munich, BayStartUP supports start-ups in their search for venture capital and in preparing for meetings with investors. If you have an innovative, tech-oriented and scalable business model, you can apply for financing coaching at BayStartUP with a 2pager.
Visit the Munich Startup platform to learn about upcoming pitch events to present your business ideas to potential investors.
More about the equity financing and venture capital option
The mezzanine capital from the Micro-Mezzanine Fund fund is a mixture of equity and debt capital. The federal promotional program targets small companies and business starters. It provides provides dormant equity via the Mittelständischen Beteiligungsgesellschaften, active in each federal state in Germany. In Bavaria contact BayBG Bayerische Beteiligungsgesellschaft mbH.
Repayment is made in three equal annual installments from the seventh year onwards. Due to the relatively high interest rates and the rapid repayment over three annual installments, the funding program is only suitable for robust business models.
Crowdfunding involves collecting money from many people via an internet platform to implement business ideas, products or projects. The City of Munich supports rewards-based crowdfunding with a “Crowdfunding Campaign Program”. Another type of crowdfunding is equity crowdfunding or crowdinvesting.
Personal grants
If you are receiving unemployment benefits (“Arbeitslosengeld”) before going self-employed you can receive a start-up grant (“Gründungszuschuss”) from the Employment Agency (“Agentur für Arbeit”). Your case manager at the Agentur für Arbeit will decide whether you meet the requirements. Expect to prepare a business plan whose viability has to be confirmed by an expert body (“fachkundige Stelle”). There is no legal entitlement to the Gründungszuschuss.
More about the start-up grant from the Employment Agency
If you are receiving citizen’s benefit (Bürgergeld) before going self-employed you can receive the initial financial support for self-employment (“Einstiegsgeld für eine selbständige Tätigkeit”) from the Jobcenter. The Munich Jobcenter is a joint institution of the Employment Agency (“Agentur für Arbeit”) and the City of Munich.
Your case manager at the Jobcenter will decide whether you meet the requirements. Make sure to ask for the AVGS voucher (“Aktivierungs- und Vermittlungsgutschein”). It allows you to receive free coaching to prepare a business plan whose viability must be confirmed by an expert body (“fachkundige Stelle”). In Munich you can redeem the voucher e.g. with the nonprofit organization Aktivsenioren Bayern e.V. There is no legal entitlement to the AVGS voucher and the Einstiegsgeld.
The Jobcenter can also provide financial assistance through benefits for the integration of the self-employed (“Leistungen zur Eingliederung von Selbständigen“). This could be a loan for the purchase of material goods that are necessary and reasonable for carrying out the self-employed work in question. There is no legal entitlement to these benefits.
Learn more about support options for Munich’s female founders and entrepreneurs.
The Integration Office “Inklusionsamt” at the Bavarian Centre for Families and Social Affairs (ZBFS) supports severely disabled founders with a range of financial services. These entrepreneurs can apply for help with costs for work assistance “Arbeitsassistenz“, professional training “berufliche Weiterbildung“, loans and subsidies for interest rates “Darlehen, Zinszuschüsse“, assistive technical equipment “technische Arbeitshilfen“, funds to finance an assistive vehicle “Kraftfahrzeughilfen” or a disabled facilities grant “Wohnungshilfen“. Before applying for any of these services you need to file an application “Antrag auf Leistungen zur Teilhabe am Arbeitsleben” with the respective rehabilitation cost carrier “Rehabilitationsträger” or the Integration Office. Make sure to get advice! Contact the Munich Integration Office for further information and counseling by phone at +49 89 18 96 60, by contact form, or in person at the service center in Bayerstrasse 32.
As part of the project “Barrierefrei Existenzgründen. Selbständig und erfolgreich im Erwerbsleben mit Behinderung (BESSER)“ project, you will receive start-up advice, follow-up support and mentoring. The contact for founders in Bavaria is the IFB Institute for Liberal Professions at the Friedrich-Alexander University Erlangen-Nuremberg. You can reach the IFB by phone on 0911 23 565 15 or by email at besser@ifb.uni-erlangen.de
The EXIST program of the Federal Ministry of Economic Affairs and Climate Action supports university graduates, scientists and students who want to realize an innovative technology-oriented or knowledge-based a business idea. They can take advantage of scholarships, advice, coaching and grants. Students from abroad who receive EXIST funding and require a visa to go self-employed can turn to the GCCC Global certification and consulting center for advice.
The Entrepreneurship Centers at Munich’s universities offer a wide range of funding and support. These include entrepreneurial training, consulting, startup programs, international programs, incubator and accelerator programs, maker spaces, competitions and prizes, access to investors, companies and institutions.
Theme based grants
Entrepreneurs based in Munich can receive a grant of up to 50 percent (with a maximum value of 3,000euros) for creative services your company needs – as long as the work is done by other Munich-based companies or individuals. Services include photos, videos, texts, proofreading, translation, visual components such as info-graphics, logos, help with storytelling, communication, PR, social media. Learn more about the municipal crowdfunding support program in the funding guideline and application form.
a) new technologies
Innovative and research-intensive start-ups in high-tech industries can apply for special subsidy and support programs and innovation vouchers for their R&D activities.
The IHK Chamber of Commerce and Industry for Munich and Upper Bavaria has listed current support programs in an online guide. Use IHK’s free consultation on funding! Are you starting in the field of skilled crafts? Contact the HWK Chamber of Skilled Crafts for Munich and Upper Bavaria to get advice.
The BayernInnovativ funding guide is your first point of contact for questions about technology-oriented funding programs of the Free State of Bavaria, the federal government and the European Union. Contact BayernInnovativ by phone at 0800-0268724 or by email at kontakt@projekttraeger-bayern.de
The Bavarian Research Alliance offers comprehensive advice on EU funding for research and innovation and arranges project partners.
The Bavarian program for the promotion of technology-oriented start-ups BayTOU, supports founders and young companies in the development of new products, processes and technical services.
BioM advises small and medium-sized biotechnology companies on the financing of research and development projects through public funding.
b) non-technical innovations
The federal funding program Innovationsprogramm für Geschäftsmodelle und Pionierlösungen (IGP) supports the development of market-oriented, non-technical innovations. Although new technologies can play a role here, they do not necessarily have to; what is important is the novelty of the problem solution. The IGP thus opens up opportunities for a wide range of new ideas in various fields such as creative business concepts, social startups and new platform formats.
With the Digitalbonus funding program, the Free State of Bavaria wants to support small businesses in equipping themselves for the challenges of the digital world. Digitalbonus enables companies to digitize through hardware and software and to improve IT security. English language leaflet (PDF, 83 KB) available for download.
Social entrepreneurship is an approach to solving social and ecological problems using innovative and entrepreneurial methods. Visit our special feature to learn more about what Munich offers and where to turn for coaching, advice, financing and funding.
The City of Munich’s Cultural and Creative Industries team provides cultural professionals and creative individuals with free advice and support on self-employment and qualifications, networks, events and financing, finding studios, rehearsal space and exhibition space as well as assistance with applications and approvals procedures. A focus is on interim space in city-owned and private locations.
The City of Munich supports professionals cultural and creative companies and professionals with money, rooms, event technology and advice. The Munich Fashion Prize, the Architecture Prize, the Art Prize and the Design Prize recognize talent and are endowed with prize money.
FFF Bayern is a central funding partner for the film and games industry in Bavaria.
Media startups can apply for the support programs of Media Lab Bayern.
The funding database of bayernkreativ is aimed at those starting in the creative and cultural industries.
The BLVKK funding database focuses on funding programs for the creative and cultural industries.
The City of Munich provides information on its funding programs, which offer subsidies for environmental and sustainability-related projects.
Competitions
The City of Munich’s Innovation Challenge is an annual invitation to submit innovative ideas to solve specific challenges the city is facing. The Innovation Award honors the proposed solutions with the greatest potential for realization. The winning team receives prize money, further financial support, and the chance to work with the city government to further develop their ideas and put them to the test. In addition, the Entrepreneurship Centers at Munich’s universities offer support for the implementation phase.
Since 1996, BayStartUP has been supporting prospective founders from southern Bavaria with the Munich Business Plan Competition. At a very early stage, they benefit from market-oriented professional feedback on their own idea, prize money and media attention. Online tutorials, financial coaching, events and access to the BayStartUP investor network round off the support service. Founders can take part in one or all three competition phases.
This support program of the Bavarian Ministry of Economic Affairs, Regional Development and Energy is aimed at early stage technology-oriented business start-ups in the field of digitization. For a period of one year up to a maximum of 50 percent of all eligible expenses, that is up 36,000 euros, can be subsidized
The Munich Startup Award is given once a year by the Munich Startup Portal to early-stage startups based in the Munich Area. Selected startups will compete against each other at the Munich Startup festival.
Coaching, spaces and events
Future startup entrepreneurs can apply for Vorgründungs- und Nachfolgecoaching Bayern, a pre-start-up coaching support for the development of business expertise. The coaching support program contributes subsidies of 70 percent for management consulting. The Gründerland Bayern database helps you to find the right consultant for your coaching.
Are you planning to set up a commercial business? Then apply for the support program at the IHK Chamber of Commerce and Industry of Nuremberg. Are you planning to start in a liberal profession? Then turn to the IFB Institute for Liberal Professions. Are you not sure which category your self-employment falls into? Read our feature “Business or liberal profession“.
Important note: Before you hire a coach, first have your application for funding approved by either IHK or IFB.
Munich Urban Colab is a joint initiative of the City of Munich and UnternehmerTUM. At the Munich Urban Colab, startups, established companies, voices from science and the creative industries, and local government bodies are developing and testing innovative solutions to urban challenges together with citizens. The building offers over 11,000 square meters of office space, areas for co-working, event and seminar rooms, living labs, the Makerspace high-tech prototype workshop and a café.
Accelerator or incubator programs are a possible form of financing and support with mentoring, coaching and a workplace.
- Gründerplattform provides information on what you need to know about this form of start-up aid and how to obtain it.
- Munich Startup portal lists Munich based programs and provides details through its Insights Dashboard.
Choose from a large variety of start-up centers for start-ups and young companies in Munich. They offer infrastructure, targeted advice, and support programs – an attractive environment that supports entrepreneurs, ideas, and innovations. There are also many co-working spaces and business centers available.
- Visit our feature Location and Premises to get an overview.
- The City’s munich business team offers free advice on commercial locations. Receive suggestions for locations and premises, information about currently available commercial space, and further support.
There are many different types of events available to startups. They offer opportunities to share experiences, showcase ideas, learn from industry experts, connect with potential investors, and secure funding.
- Munich Startup portal lists major events.
- Visit our events feature to learn about workshops and seminars for those considering becoming self-employed in Munich.
- Attend our free English language online seminar “How to start a business”.