Financing a business startup – what options are there? | Business loan

Few founders can finance the foundation with their own funds. Therefore, debt capital is required in many cases.

Equity and debt

Equity and debt

Without equity, starting a business is possible in the fewest cases. By using its own capital, the start-up entrepreneur proves to his lenders the seriousness of his project. Only those who invest in their own project and believe in it, will be able to convince its financiers.

Prerequisites for lending

Prerequisites for lending

A certain amount of equity, typically between 10 and 30 percent of total capital needs, should be available. Lack of equity can be secured by a guarantee. In addition to the commercial and professional suitability, proof of economic viability is required for external financing. This is to be presented in the form of a so-called business plan by the founder.

1. bank loan

1. bank loan

The bank loan is a classic form of financing, even for business founders, which can be combined with other financing options. Business start-ups are interesting customers for the banks, as the business relationship with the bank grows and can be expanded with the growth of the company to be founded.

2. Intrasavings financing

The Kreditanstalt für Wiederaufbau offers various financing options to support business start-ups:

  • Entry fee:
    The entry fee is suitable for entrepreneurs with financing needs up to 50,000 euros. A redemption-free start-up period is possible, as well as an 80-percent indemnity for the house bank. This makes it easier for start-ups to access a loan.
  • Unternehmerkapital:
    Business start-ups receive access to low-interest-rate capital within the “ERP Capital for Founding” funding program up to 3 years after the foundation. The financial resources are granted in the form of a so-called subordinated loan. This has a positive effect on the capital structure if additional loans are to be raised with banks.
  • Entrepreneur Loan:
    The entrepreneurial loan is also open to start-ups. It is characterized by a fixed interest rate of up to 20 years and the related planning certainty.

3. Venture capital

3. Venture capital

The provision of risk capital can be another important building block for financing business start-ups, especially in the case of innovative start-up ideas.

  • ERP Start Fund:
    Here, Intrasavings provides venture capital in cooperation with other investors.
  • Venture capital companies:
    These companies mainly provide equity capital for the creation of innovative technology companies. If necessary, the investor can influence the management of the young company. To what extent this is desired on the part of the founders, must first be determined by contract.
  • Business Angels:
    These are private investors who invest in growth-oriented start-ups. Usually these are older, wealthy business people who can assist start-ups by agreement with advice from their own professional practice.

Financing options for unemployment

Financing options for unemployment

For unemployed persons who are at least still entitled to 3 months unemployment benefit I, promotion of start-up by the Employment Agency comes into question.

The start-up entrepreneur must strive for an economically viable main acquisition with the establishment of eg a mini-GmbH. If the company concept is found to be suitable by a competent body, nothing stands in the way of support.

For the first 9 months after start-up, the unemployment benefit and a social security contribution are paid by the Employment Agency. A grant for another 6 months is at the discretion of the Employment Agency. It is usually paid if the startup’s good development can be shown in practice.

  • Thomas Hammer
  • Publisher: Stiftung Warentest
  • Hardcover: 336 pages