What impact does the extension of unemployment benefit have?

In May of this year, a special regulation on unemployment benefit (ALG) was decided. With this, ALG-1 recipients whose entitlement to funding would expire this year will receive an extension of their payments (external link). For business founders who want to become self-employed out of unemployment, the question now arises as to whether the agreed extension influence on the start-up subsidy by adding the existing remaining entitlement and the additional days together. We clarify.

It is worth checking early for ALG-1 residual entitlement in the case of start-up grants

Economic life has come to a standstill throughout Germany due to the corona-related restrictions. As a result, more than 60% of companies had to accept a severe drop in sales (external link). This also has consequences for the labor market, where fewer new jobs are currently being filled. Therefore, as part of the Social Protection Pact II, the ALG 1 entitlement period was extended by three months (90 days) for those whose entitlement ends between May 1st and December 31st, 2020. However, this has to do with the deadline for applying for a start-up subsidy no influence. This means that founders who, for example, still have 60 days of regular remaining entitlement to the ALG 1 standard benefit when they apply, cannot apply for the start-up grant even if the 90 days are extended. The reason for this is that there is only an entitlement to the extended subsidy if the entitlement to the original unemployment benefit has been exhausted. Unfortunately, the addition of the remaining entitlement and the extension period is not possible here.

Worth knowing: However, the desire to “be self-employed” does not have to be put on hold. Because if the transition from ALG 1 to ALG 2 (also known as Hartz 4) is imminent, founders can apply for state help in the form of an entry fee.

The new regulation on unemployment benefit shows that it is important early to check whether there are still at least 150 days remaining entitlement to ALG 1. This is worth it, because after all, business founders who want to end their unemployment by founding a company can receive financial support for a total of 15 months. This is divided into two phases. In the first phase (six months) the ALG 1 plus a flat rate of 300 euros will be paid out monthly. In the second phase, further funding of 300 euros per month can be applied for for nine months.

Don’t forget to draw up a business plan and obtain a viability certificate

However, it should be remembered that the start-up grant is a discretionary benefit to which no legal right consists. It is therefore all the more important to start well prepared in order to convince the clerk of your own business idea. An essential requirement is the creation of a business plan. Because in a business plan, both the business idea is described in detail and a comprehensive financial plan as well as a sales and profitability forecast are presented in detail. With the help of a business plan, the clerks can get a good picture of the start-up and the project.

Furthermore, a carrying capacity certificate (also expert opinion called) to obtain. This is an expert opinion which confirms that the project is economically viable.

Tip: Business founders who need a viability certificate (also possible at short notice) can have this issued in the start-up center of “Deutschland starts”. This is recognized as a competent body: contact us