Up to €5,000 from the Jobcenter for your business — grants and loans under § 16c SGB II

Do you receive Grundsicherungsgeld, formerly Bürgergeld, and need equipment for your self-employment? The Jobcenter may support necessary business purchases. This support can take the form of a loan or a grant.

Grants are limited to a total of €5,000. Approval is not guaranteed. The support must be appropriate for your business proposal, and each case is assessed individually. The legal basis is § 16c SGB II.

Who may qualify for support?

This support is for people who are capable of working, are entitled to Grundsicherungsgeld and are starting or already pursuing self-employment as their main occupation. Expanding an existing side business into your main occupation may also qualify.

The Jobcenter assesses, in particular:

• Your suitability: do you have the professional and business knowledge needed for the proposal?
• Your financing: can other sources be used, such as funding programmes, bank loans or microloans?
• Your business: it must not be insolvent.
• Your economic prospects: the business model must be expected to be economically viable.

According to the Bundesagentur für Arbeit, people who receive Arbeitslosengeld together with supplementary Grundsicherungsgeld cannot receive support under § 16c. In this situation, the Agentur für Arbeit is the first authority to contact; it can assess whether, for example, a Gründungszuschuss may be an option. Source: Bundesagentur für Arbeit — LES.

What does “main occupation” mean?

A small side business on its own is not enough. As a rule, your self-employment must take up at least 15 hours per week and more of your time than any additional employed work. The Jobcenter assesses special circumstances separately. The economic importance of your self-employment is also taken into account. Source: BA professional guidance, section 2.1.

What does “economically viable” mean?

There must be grounds to expect that your business can operate sustainably and that, within a reasonable period, you will need less support for living costs or no longer need it. A business idea alone is not enough. As a rule, the law provides for an assessment by a competent body, known as a fachkundige Stelle. Source: § 16c paragraph 3 SGB II.

You should therefore explain clearly who will buy your products or services, which prices are realistic and what costs will arise. The expert assessment considers factors including market prospects, qualifications, capital requirements and expected business results. A positive assessment supports your application but does not bind the Jobcenter to approve it. Source: BA — recommendation by the competent body.

Which purchases may be funded?

The deciding factors are whether the purchase is necessary for your specific activity and reasonably priced. An item does not become eligible simply because it appears in a list of examples.

The distinction is particularly important for goods and materials: a specifically justified provision of business resources is different from the continuing financing of day-to-day expenses. Source: Bundesportal — support for self-employed people.

Personal purchases also fall outside funding for necessary business assets. Existing debts and debt refinancing are not covered. Sources: § 16c paragraph 1 SGB II, Bundesagentur für Arbeit.

To prepare: for each item, explain why you need it, how much it costs and why a cheaper solution already available is insufficient. “A €900 laptop to complete customer orders” is easier to understand than “€5,000 in startup capital”.

Loan or grant: what is the difference?

Under BA guidance, a loan is the usual form of support. A grant may be considered after assessing the individual circumstances. The two can be combined. The grant limit applies to the total amount; it does not start again for each item or each subsequent application. Source: BA professional guidance, sections 3–3.3.

“Non-repayable” therefore does not mean “unconditional”. If the money is used for a different purpose or conditions are not met, approval may be revoked and repayment demanded. Sources: § 47 SGB X, § 50 SGB X.

How to prepare your application

1. Discuss your needs with your Jobcenter

Ask specifically about support for necessary business assets under § 16c paragraph 1 SGB II. Clarify which documents and supplier quotations your Jobcenter needs and how to submit your application.

2. Gather the documents

Depending on the proposal, the following may be required:

• a business plan, a capital requirements plan and a financing plan;
• a revenue and profitability forecast;
• your CV and evidence of qualifications;
• quotations for the purchases for which you are requesting support;
• an assessment by a competent body;
• where applicable, registration documents, contracts and evidence concerning other financing options;
• details of state aid already received, where applicable in a de minimis declaration.

The Jobcenter determines the specific list of documents. Sources: Bundesportal — required documents, BA viability assessment form.

Our existing resources can help you prepare:

• Business plan for the Jobcenter: connect each purchase to what you offer and your planned income.
• Startup costs and capital requirements calculator: work out your total funding needs. Do not yet deduct a possible grant as secured financing.
• Assessment by a competent body: prepare the financial and business documents. For your § 16c application, first clarify with the Jobcenter which body and procedure are intended.

3. Submit your application and wait for approval

Written approval first, purchase afterwards. Submitting an application or having a positive discussion with an adviser is not enough. Do not yet place binding orders for the requested items or pay deposits. Source: Bundesagentur für Arbeit — application and assessment.

4. Purchase in line with the decision and submit evidence

Check which purchases, amounts and conditions have been approved. Keep purchase documents and proof of payment, and submit them as required. Agree any changes with the Jobcenter before buying. Source: Bundesportal — procedure.

How does § 16c differ from other forms of support?

Eligibility and decisions must be assessed separately for each form of support. You can read more about Einstiegsgeld in our existing guide to self-employment with Einstiegsgeld.