🔖 Contents on this page:
- Grants vs. Favorable Loans
- 1. Identifying Relevant Programs
- 2. Checking Eligibility
- 3. Assessing Cost-Benefit Ratio
- 4. Preparing Documentation
Grants vs. Favorable Loans
Grants
Non-repayable funds are often aimed at specific innovation or research projects.
- No ownership stake is given in exchange
- Often focused on innovation, sustainability, or social impact
- Detailed application process with specific criteria
Favorable Loans
Loans with more favorable conditions than the market, such as lower interest rates or longer repayment periods.
- Unlike grants, these monies need to be repaid but often with generous terms
- Can be used for a wider range of business activities
1. Identifying Relevant Programs
Look for programs specific to your location, industry, or business stage.
🌱 Identify relevance by stage:
Incorporation | Business Plan Competitions, EXIST, Gründungszuschuss, Local Founder Support |
(Pre-)Seed | Regional Funding Schemes, EIT, EIC, R&D Tax Allowance (BSFZ), National Grants |
Series A | EIC, R&D Tax Allowance (BSFZ), National Grants |
🌐 Identify relevance by type of institution:
2. Checking Eligibility
Eligibility varies depending on the specific program. Ensure your startup meets the necessary criteria for the desired program. Ask yourself the following question beforehand:
- In what country is your company incorporated? In what region specifically?
- How old is your business and what stage are you in?
- Is your company financially stable?
- Have you already received any grants (e.g. de-minimis limit for state aid)?
- Does your start-up align with certain goals (e.g. environmental impact)?
3. Assessing Cost-Benefit Ratio
Look at the trade-off between the effort required to apply, the effort required to report, the maximum payout, and the likelihood of success.
Generally, the higher a program's potential payout, the greater the effort required for application and ongoing compliance. However, some programs, such as the R&D Tax Allowance, offer high payouts with relatively lower administrative burdens.
4. Preparing Documentation
Prepare a master file with updated versions of all required documents for quick access like business plans, financial history & forecasts, a project plan with detailed explanation of how the funds will be used and previous funding history.
- Keep detailed records of all costs.
- Break down your product development into clear, fundable projects.
- Avoid double funding. The same costs often cannot be claimed under multiple programs.
🚨🚨 See also our subchapter on the R&D Tax Allowance or “Forschungszulage”, which is public funding program in Germany by the federal government, available for start-ups and SMEs involved in innovative research and development projects. The program provides a tax credit for eligible R&D costs, which can be applied retroactively for up to 4 years
Thoughts? Feedback? Something missing? Please let us know: johanna.junkermann@b2venture.vc
R&D Tax Allowance - 🇩🇪”Forschungszulage”