Most founders in Germany don't fail to get a loan because their idea is bad. They fail because they go to the bank too early, with the wrong documents, or with numbers the bank can't follow. This guide walks you through how a business loan works in Germany, step by step, in English.
Looking for an overview of the programmes themselves (IBB Berlin Start, KfW StartGeld, IBB Mikrokredit)? Read our guide to business loans in Berlin. This article is about the process: how to get approved.
How business loans work in Germany
Most start-up loans in Germany are state-backed loans that you get through a normal bank. KfW (the federal development bank) and IBB (Berlin's development bank) don't usually lend to you directly. Your bank (Hausbank) checks your plan, applies for the programme on your behalf, and pays out the money. The state takes on part of the risk, which makes the bank more willing to say yes.
The most common example is the ERP-Gründerkredit – StartGeld from KfW:
Up to €200,000 per founder, of which up to €80,000 for working capital
KfW takes on 80% of the bank's risk
Term of up to 10 years, with up to 2 years without repayments
No equity required. Your bank may still ask for collateral.
Small amounts can also work without a Hausbank. In Berlin, IBB offers microloans of up to €25,000 through the KMU-Fonds in a simplified procedure. For larger projects, the Bürgschaftsbank Berlin can guarantee up to 80% of a loan, and the federal ERP-Förderkredit Gründung und Nachfolge can cover up to 35% of a project (max. €500,000) with a full guarantee from the Bürgschaftsbank.
Step 1: Know exactly how much you need
Banks want a clear number, and it has to add up. Make a capital requirement plan (Kapitalbedarfsplan) with:
Investments: equipment, laptop, furniture, vehicle, renovation
Start-up costs: registration, notary, website, first marketing
Working capital: stock, rent deposit, first months of running costs
Your own living costs until the business pays you. Founders often forget this.
A buffer of around 10–20% for things that cost more or take longer
Asking for too little is as risky as asking for too much. If the money runs out after six months, the bank sees a failed plan.
Example: a capital plan for a small studio
Here is a simplified example for someone opening a small service studio. Your numbers will be different, but the structure is what the bank wants to see:
Investments (equipment, furniture, renovation): €18,000
Start-up costs (registration, website, opening marketing): €4,000
Working capital (rent deposit, first 3 months of rent and running costs): €9,000
Own living costs for the first 6 months: €12,000
Buffer (about 15%): €6,500
Total capital need: €49,500, financed for example by €7,500 own savings and a €42,000 loan
Every line should be backed by a quote, a rental offer or a clear calculation.
Step 2: Write a business plan the bank can check
The bank reads your business plan to answer one question: can this person pay back the loan? Your plan should cover:
The offer, the customers and why they will buy from you
Competition and pricing
Your qualifications and experience in this field
Marketing and sales: how you will get the first customers
A financial plan: revenue forecast, profitability forecast (Rentabilitätsvorschau) for 3 years and a liquidity plan (Liquiditätsplan) month by month for at least the first year
The numbers matter more than the text. Every revenue figure should be explained: how many customers, at what price, from which channel.
Step 3: Prepare your documents
Typical documents a bank asks for:
Business plan and financial plan
CV and proof of qualifications (certificates, references)
ID and, for non-EU citizens, a residence title that allows self-employment
SCHUFA credit report
Current account statements and an overview of your assets and debts
Offers or quotes for planned investments
For existing businesses: last annual accounts and current figures (BWA)
Documents in English often need a German summary or translation. Prepare this early.
Step 4: Choose the right bank and route
Not every bank works with funding programmes, and the person you speak to matters. Look for a bank with a dedicated business or start-up advisor. Sparkassen, Volksbanken and some direct banks regularly process KfW loans. Talk to two or three banks, not just your personal bank.
Ask directly: "Do you work with KfW StartGeld and IBB programmes, and how long does the decision take?"
Step 5: Apply before you start
This is the most common mistake. KfW and IBB loans must be applied for before your project starts. If you sign a lease, buy equipment or start the business before the application, those costs often can't be financed anymore. Plan the bank talk early.
Step 6: The bank meeting
Treat it like a job interview for your business:
Explain your business in two minutes, in simple words
Know your numbers without reading them: monthly costs, break-even, how much you need and why
Be honest about risks and show your plan B
Bring printed documents and a one-page summary
How long does it take?
Every bank and programme is different, but a realistic plan looks like this:
2–6 weeks: capital plan, business plan and financial plan
1–3 weeks: first bank meetings and collecting documents
2–6 weeks: the bank's review and, for state-backed loans, the application to KfW, IBB or the Bürgschaftsbank
After approval: signing the loan contract and payout, often in parts
So plan for roughly two to four months from first idea to money in your account, and don't sign leases or buy equipment before the application is in.
What does a business loan cost?
Interest on state-backed loans depends on the programme, the term and your risk rating, which the bank sets after looking at your plan and collateral. KfW publishes its current conditions on its website, and they change regularly. Ask every bank for the full cost: interest rate, fees, the repayment schedule and how the repayment-free years work. Repayment-free years help your cash flow at the start, but you still pay interest in that time.
Extra tips for non-EU founders
Check your residence permit first. It has to allow self-employment (selbstständige Tätigkeit gestattet). If it doesn't, apply for a change at the immigration office (Ausländerbehörde) before you go to the bank.
A short SCHUFA history is normal if you're new in Germany. Bring proof of income, bank statements and, if you have it, a credit report from your home country.
Bring a German summary of your business plan. Many bank advisors read English, but the documents they forward to KfW or IBB are in German.
If the bank says no
A no is common, and it is often not final. Ask for the reasons. Typical fixes are a revised financial plan, a smaller first amount, a guarantee from the Bürgschaftsbank, or a microloan as a first step. Combining financing also helps: for example, the Gründungszuschuss for your living costs plus a loan for investments.
What I learned applying for a business loan myself
I don't just help founders with financing. This year I went through the process myself, applying to finance the takeover of an existing wellness studio in Berlin. I registered the business, wrote the business plan and financial plan, looked into IBB Berlin Start, and sat through the bank conversations.
In the end, the deal didn't go through, for a reason many small business deals in Germany run into, and walking away was the right business decision. But the process taught me more than any guide could:
Start talking to the bank before you sign anything. Financing takes longer than you think, and the bank sets the pace, not you.
Your business plan is written for the bank. I reworked mine during the bank review. Every number needs a "why" the bank can check.
Each programme has different limits and requirements. Figure out your best strategy together with your consultant before you commit.
Collateral comes up even with state-backed loans. A guarantee lowers the bank's risk but doesn't make the question disappear. Know your answer in advance.
A "no" is information, not failure. Knowing when to stop is part of being a founder.
That's why I now prepare founders for exactly these conversations.
Combine your loan with free or subsidised support
Founding from unemployment? AVGS founder coaching (Gründungscoaching) can be free for you and helps you build your business plan.
Already running a business? The BAFA programme for SME consulting can cover 50% of consulting costs (80% in eastern German states), up to €3,500 in eligible costs. You must apply before the consulting starts.
Frequently asked questions
Do I need equity for a KfW loan?
For the KfW StartGeld, no equity is required. Banks still like to see some own contribution, because it shows you share the risk.
Can I get a business loan without a Hausbank?
For smaller amounts, yes. In Berlin, IBB offers microloans of up to €25,000 through the KMU-Fonds without a Hausbank. For larger loans, you usually need a bank.
Can freelancers get KfW StartGeld?
Yes. The programme is open to founders, freelancers and young businesses that have been running for no more than five years, including part-time businesses.
Can I combine the Gründungszuschuss with a loan?
Usually yes. The Gründungszuschuss covers your living costs at the start, and the loan finances your investments. Plan both in your financial plan.
Can I get a loan as a non-EU founder?
Yes, if your residence permit allows self-employment and your plan convinces the bank. A short credit history in Germany makes good documents even more important.
What happens if the bank says no?
Ask for the reasons, improve your plan, and try another bank or a different route, such as a microloan or a Bürgschaftsbank guarantee.
Free office hour: funding your business in Germany
Want to ask your questions live? Join our free office hour in English. We walk you through the Gründungszuschuss, KfW and IBB loans and the BAFA subsidy, and then answer your questions. See the dates and save your free spot
How Rizing helps
We help you through the whole process, in English, German or Mandarin: evaluation of your idea, business plan and financial plan, preparation for the bank meeting, and bank credit through our partner banks.
See our business loan and funding service
This article gives general information, not financial or legal advice. Conditions of funding programmes change; check the current terms with KfW, IBB or your bank.