Germany's state development bank KfW (Kreditanstalt für Wiederaufbau) offers subsidised loans for founders and established businesses. The main advantage of KfW programmes is that the state takes on part of the bank's risk.

KfW StartGeld: the key conditions

The flagship programme for new businesses (ERP-Gründerkredit – StartGeld) provides up to €125,000 for investment and working capital. It is available to new businesses and to companies in their first five years. KfW takes on 80% of the commercial bank's credit risk.

The house bank principle (Hausbankprinzip)

KfW does not lend directly to individuals or businesses. You take your business plan to the bank where you have your business account (Sparkasse, Deutsche Bank, Volksbank). Your house bank assesses your creditworthiness, submits the application to KfW and signs the loan agreement with you.

Requirements for the business plan and creditworthiness

The bank requires a detailed profitability calculation, proof of the founder's relevant experience and a clean personal credit record with no negative entries at SCHUFA. Even though the bank is released from 80% of the risk (Haftungsfreistellung), you remain fully liable to your house bank for repaying the loan.

Repayment terms and capital repayment holidays

KfW StartGeld loans run for up to 5 or up to 10 years at a fixed interest rate for the whole term. An important advantage is the repayment-free start-up period (tilgungsfreie Anlaufjahre): one year with a 5-year term and up to two years with a 10-year term, during which you pay only interest.

What to check

  • Prepare a detailed investment plan with quotes for the equipment you plan to buy.
  • Check the SCHUFA records of all key people involved in the project.
  • Have a preliminary meeting with the lending department of your house bank.
  • Allow at least six to eight weeks for your bank and KfW to process the application.

Example situation

A car repair shop owner takes out an €80,000 StartGeld loan to buy lifts and diagnostic equipment and uses the two-year repayment holiday until the business makes a stable profit.

Next step

A KfW loan is a realistic source of finance; the keys to success are a convincing business plan and a well-prepared conversation with your bank's loan officer.

Official information on this topic

Checklists and examples are organisational recommendations. Requirements depend on the procedure, the city and your situation; check them with the relevant office before you act. Please discuss legal and tax questions with an authorised professional.

This article was prepared with the help of AI. The example illustrates the approach and does not describe a client case.