Questions

Who can use Mikrokredit Brandenburg?

Small and medium-sized enterprises in the State of Brandenburg are eligible to apply for Mikrokredit Brandenburg for up to 10 years after starting a company. Additionally, Mikrokredit Brandenburg can be used for start-ups, successor companies and businesses as secondary activities.

Mikrokredit Brandenburg is available to members of the liberal professions, sole traders and companies.

Who is excluded from Mikrokredit Brandenburg?

Applicants are excluded if

  • insolvency proceedings have been applied for or commenced over their assets;
  • they have submitted a statutory declaration pursuant to section 807 of the German Code of Civil Procedure (ZPO);
  • they intend to use the grant to pay debts;
  • they appear to be a business in a difficult financial situation;
  • they are operating in the areas of agriculture, fishing and fish farming;
  • they are commercial agents or sales representatives;
  • they are financial service providers or estate agents;
  • they are lawyers, notaries, tax advisors or accountants;
  • they operate in the automobile trade;
  • they hire and sell charter boats;
  • they are providers of gambling activities, lotteries or they operate arcades.
What is supported?

Mikrokredit Brandenburg can be used for start-up costs, equipment and materials, or for the pre-financing of orders.

Materials

a) Investments

For example, acquisition costs (for the purchase of a business), purchase of machinery, facilities and equipment, operational and shop fitting (for example, shop/office furnishing, tills, software etc.), low value commodities with a value of up to 150 euros.

b) Initial stocking with materials and goods for sale and storage

For example, purchase of groceries for a restaurant, or goods to trade for a sole trader

Operating costs

  • On-going costs, e.g. for leasing, renting, staff costs, for marketing, Consulting, travel costs, training, restocking costs  and for deposits
  • Fees for business registration, solicitors’ costs, costs for basic marketing items, Consulting fees related to starting the company
What are the credit conditions?

Credit is financed at customary rate of interest There are many advantages to Mikrokredit Brandenburg:

  • Credit sums from 2,000 to 25,000 euros
  • The current interest rate is 1.77%
  • 100% financing is possible with no own equity
  • Early repayment without penalty is possible
  • 100% payment without processing fees
  • Loan duration is for five years with repayment in monthly instalments.
What advantages does Mikrokredit Brandenburg offer businesses?

Mikrokredit Brandenburg is provided by the Business Promotion Bank of the Federal State of Brandenburg on behalf of the Ministry for Economic Affairs and Energy of the State of Brandenburg. Therefore, Mikrokredit Brandenburg offers a reliable alternative in a sometimes rather confusing capital market.

The State of Brandenburg aims to fill a gap in the area of business financing with this credit programme.

Start-ups and entrepreneurs who are not able to provide the otherwise required securities are also eligible for Mikrokredit Brandenburg.

In general, microcredit programmes are not profitable for many business banks, because these programmes often require a long review and administrative process for a relatively small credit sum. Further, credit providers  often struggle to evaluate the quality of each investment, and therefore require additional security in the form of equity investment and the provision of property or guarantees.

Mikrokredit Brandenburg provides small and medium enterprises with targeted loans that can be used for start-up, or for securing and developing their businesses.

Small and medium-sized operations are the backbone of the economy in the State of Brandenburg. They create the most jobs.

Until when can I apply for Mikrokredit Brandenburg?

No. The credit application can be submitted to the Business Promotion Bank of the Federal State of Brandenburg following the expert consultation, together with the confirmation from the relevant chamber. The confirmation contains the statement by an expert from the responsible chamber.

Do I have to submit my credit application before the expert consultation at the Chamber of Commerce and Industry or the Chamber of Trade?

No. The credit application can be submitted to the Business Promotion Bank of the Federal State of Brandenburg following the expert consultation, together with the confirmation from the relevant chamber. The confirmation contains the statement by an expert from the responsible chamber.

Can I apply for credit as a foreign national?

Yes, if the legal requirements are met.
You can find more information in the brochure “Open for the newly self-employed” – Guidance on the legal framework conditions for refugees ("Offen für neue Selbständige" - Leitfaden zu gesetzlichen Rahmenbedingungen für geflüchtete Personen).


Where can I apply for Mikrokredit Brandenburg?

It is very easy to apply for Mikrokredit Brandenburg; there are only three steps necessary beforestarting:

  1. Download and complete the Concept/Business idea form and take it to the expert consultation at the chamber of commerce and industry or the chamber of trade.
  2. Complete the credit application online in the customer portal of the Business Promotion Bank of the Federal State of Brandenburg and send it together with the confirmation from the chamber.
  3. The Business Promotion Bank of the Federal State of Brandenburg will decide on your application, agree a credit agreement with you, and release the payment.
What documents do I need?

You will find a summary in the checklist for the Application for grant of a loan from Mikrokredit Brandenburg.

What securities to I have to provide?

In principle, no securities are necessary.

Can I still get microcredit with a poor credit rating?

The Mikrokredit Brandenburg grant programme can also be considered for businesses and freelancers who have no other access to bank credit. It is also intended for entrepreneurs and self-employed people who have set up their company following unemployment and therefore have a poor credit rating.

Mikrokredit Brandenburg will also be granted even if no personal assets are available as security.

A negative report from Schufa (German credit reference agency) is not a reason to be excluded, as applications will be handled on a case-by-case basis.

It is also possible to be granted credit for a new start-up business following the failure of a first own business, provided that no obligations from the first start-up affect the new business.

Can Mikrokredit Brandenburg be combined with another grant or form of financing?

Duplicate grants are not permitted.

In principle, Mikrokredit Brandenburg can be used in connection with additional third-party financing.

Can secondary activities obtain Mikrokredit Brandenburg?

In principle, yes, if self-employment as a secondary activity creates an independent entrepreneurial presence in the market. It is not possible to provide credit, if there is only a single customer or if there is an employment-like working relationship.

When is early commencement of activities possible?
  • Early commencement of activities is possible if the application and the report of the expert consultation have been received by the Business Promotion Bank of the Federal State of Brandenburg.
  • Permission for early commencement of activities can be requested in the application form for microcredit.
  • As there can be some delay in the arrival of the expert opinion at the Business Promotion Bank of the Federal State of Brandenburg, the written confirmation from the responsible authority will be treated as equal to the opinion.
What are common reasons for rejecting funding?

Business idea/concept not feasible through start-up

Your business concept must be plausible. A successful application to the microcredit programme provides funding and also gives you confidence in your future plans. Estimates for future revenues should be described for the educated layman. There are industry briefings and market studies available on the Internet which provide guidance on fixed costs and sales-dependent variable costs.

Income from the business does not cover personal living expenses

Please be aware that income from your business must cover your living costs including monthly instalments of the credit as well as business and personal taxation.

The business idea cannot be proven to be market ready

Business concepts which do not show a profit at the agreed commencement date for repayments (up to six months repayment-free may be granted) cannot be financed with microcredit. This relates in particular to start-ups which have high technical risks in relation to the market readiness of the product or the planned services. For credit to be granted it is necessary that the debt can be serviced from the on-going liquidity of the business.

For businesses that do not yet meet the above mentioned requirements, we refer to other grants and sources of financing that are more tailored to start-up business in an early stage.

Personal/professional conditions are not met or cannot be ensured in another way

During your business planning you should ensure that the necessary knowledge and abilities for the business are available. Ask yourself what knowledge you require for your start-up. You can fill any gaps by means of personal training or by using professional support (tax office, business advisors, engagement of expert staff). Consider this in your business concept.

Over-indebtedness

Prior to the application for microcredit you should carefully consider your asset situation. Mikrokredit can only be granted where profitability and liquidity would permit further third party investment. If you already have significant commitments and numerous sources of financing in your asset structure, and/or an imbalance to your own available capital, your application for microcredit may be declined in the circumstances.

Businesses in difficulties

Businesses in difficulties cannot receive microcredit. Prior to submitting the application, check whether you meet the criteria set out in the following link:

(https://www.ilb.de/media/dokumente/dokumente_fuer_programme/
programmuebergreifende_dokumente/ergaenzende_informationen_1/
Merkblatt_Unternehmen_in_Schwierigkeiten.pdf
)

Are there other financing possibilities?

If Mikrokredit Brandenburg is not suitable for your purposes, you can also find out more about the early phase and growth funds. The Ministry for Economic Affairs and Energy administers the Early Phase and Growth Funds (BFB III) together with the Business Promotion Bank of the Federal State of Brandenburg. The financing of small and innovative enterprises (SE) in the early phases is open to all. This is combined with a subordinated loan and is dependent upon the capital requirements as well as the liquidity and balance sheet situation of a business. The Early Phase and Growth Funds also offer open participation and similar investments for the growth of SMEs in various phases of product development. This enables investment in fixed assets and intangible assets as well as in operating materials to be supported and also applies to cquisition of shares in a business.

Further financing options for start-ups can also be found on the website of the Business Promotion Bank of the Federal State of Brandenburg at www.ilb.de/de/existenzgruendung.