Digitization Funding 2025: Complete Guide for Businesses (+ AI)

The Funding Landscape Has Changed Dramatically

Digital transformation is no longer a trend – it's a survival question for German small and medium-sized enterprises (SMEs). While large corporations maintain entire innovation departments, SMEs often stumble over one hurdle: the budget. The good news is that the government provides billions in funding. The bad news? The funding landscape has radically changed in 2025.

Anyone searching for 'digitization funding' today often finds outdated information. The former flagship program go-digital was discontinued on December 31, 2024, as confirmed by innovation-beratung-foerderung.de. The popular program Digital Jetzt is also no longer accepting new applications.

This article clears up outdated information. We'll show you where you can actually still get funding in 2025, how to finance AI projects (Artificial Intelligence), and why the Research Allowance or BAFA consulting grants are the new secret weapons for your liquidity. For businesses implementing innovative solutions like AI product consultation, understanding these funding options is crucial.

Current Status 2025: Critical Funding Updates

Before you invest time in application forms, we need to conduct a hard reality check. The year 2025 marks a turning point in German funding policy. Due to the strained federal budget situation, some of the most well-known programs have been stopped or not renewed.

Red Lights: These Programs Have Ended

It's crucial that you don't waste resources on programs that no longer exist, even though many 'advice sites' still list them:

• go-digital: This program was the standard for consulting services and web projects for years. Status: The directive expired on December 31, 2024. No new applications can be submitted. Ongoing, approved projects are still being processed, but this funding pot is closed for new ventures.
• Digital Jetzt (Investment Funding for SMEs): The BMWK program for funding hardware and software investments has also expired (limited until December 31, 2023). While there were hopes for a relaunch, according to the Federal Ministry for Economic Affairs, no application submission is currently possible and budget funds are exhausted.

Green Lights: Where the Money Is in 2025

The focus in 2025 shifts away from blanket 'watering can subsidies' toward three pillars:

1. Consulting Funding: Strategic planning continues to be strongly supported (e.g., BAFA).
2. Loans with Repayment Subsidies: KfW and state banks offer favorable interest rates combined with 'gifts' (repayment subsidies) that you don't have to pay back.
3. Tax Research Allowance: The most powerful instrument for companies developing their own software or implementing innovative AI solutions.

Federal Digitization Funding Programs: Major Alternatives

Since Digital Jetzt and go-digital have been discontinued, companies need to rethink their approach. Here are the three most important federal instruments available in 2025. Companies looking to implement AI lead generation solutions should pay particular attention to these options.

A. BAFA: Funding for Business Know-How

This is the most direct alternative to the consulting module of go-digital. If you don't yet know which software or AI solution you need, but first need to develop a strategy, this is your program.

According to the BAFA official guidelines, the program covers general consulting on all economic, financial, personnel, and organizational questions of business management. This explicitly includes digitalization consulting (e.g., introduction of new software, process optimization, IT security).

• Who is funded? SMEs (Small and Medium Enterprises) and freelance professionals.
• How much is available? The subsidy amounts to 50% to 80% of consulting costs. Maximum assessment basis: €3,500 (established companies). Maximum subsidy: €1,750 (western German states) to €2,800 (eastern German states), as detailed by IHK.
• Advantage: Very unbureaucratic. You don't have to write a huge project plan, just commission a BAFA-listed consultant.
• Duration: The current directive is valid until the end of 2026.

B. ERP Digitalization and Innovation Credit (KfW)

If you're planning high investments in hardware, software, or networking your production, this is the successor for the investment side.

As explained by foerder-welt.de, this program funds digitalization projects (e.g., networking of ERP systems, cyber security, cloud applications) and innovation projects (development of new products).

• The trick: It's a loan, BUT there's often a repayment subsidy. This means you don't have to pay back part of the loan.
• Conditions: Loans from €25,000 to €25 million. Terms up to 10 years. Additional ERP funding bonus possible for innovative companies (up to €200,000 gifted).
• For whom? Established companies and startups.

C. The Research Allowance (Tax Funding)

Perhaps the most underestimated instrument. It's not an application in the classic sense, but a tax reimbursement. This is particularly relevant for businesses implementing AI-powered customer service solutions.

Why is this relevant for digitalization? If you develop your own software, have an interface programmed that doesn't exist yet, or train AI models, this often counts as 'Experimental Development.'

• The numbers for 2025: You get 25% of personnel costs (wages + salaries) for R&D personnel reimbursed. For contracts with third parties (e.g., external developers), you get 15% of costs reimbursed (effectively 25% on 60% of the invoice).
• New from 2025/2026: According to gewi.de, the assessment basis increases to up to €12 million.
• Advantage: There's no 'application deadline.' You have a legal entitlement to it if the criteria are met, as confirmed by clever-funding.de.

Digitization Funding by German State: Quick Overview

As the federal government pulls back, the states are stepping in. But be careful: there's a lot of movement here too. Here's the status quo of the most important federal states for 2025.

1. Bavaria: Digitalbonus (The Classic)

Bavaria maintains its successful model, making it an excellent option for companies implementing solutions like the AI Employee Kira that transformed customer service for garden retail.

• Standard: Up to €10,000 for standard software and IT security.
• Plus: Up to €50,000 for projects with special innovation content (e.g., AI integration).
• Important Update: From May 2025, according to digitalbonus.bayern, an ELSTER business account is mandatory for application submission. Third parties (consultants) may no longer submit the application for you.
• Caution: There's a monthly quota. The application server usually opens on the first business day of the month at 10:00 AM and is often closed after just a few hours ('first-come-first-served').

2. Baden-Württemberg: Digitalization Financing

There was a major change here. The popular 'Digitalisierungsprämie Plus' (pure grant) expired on June 30, 2025 or was integrated into loan funding, as reported by the L-Bank.

• New: You now apply for 'Digitalization Financing' from the L-Bank.
• Mechanism: You take out a loan but receive a repayment subsidy after successful project implementation. The money you don't have to pay back works like the old grant, but is tied to the loan.
• Minimum amount: According to handwerk-bw.de, this was recently reduced to €10,000 to help smaller businesses.

3. NRW: Mittelstand Innovativ & Digital (MID)

NRW relies on a voucher system. This can be particularly useful for businesses exploring AI product consultation implementations.

• MID Vouchers: For analysis, digitalization, or IT security.
• Status: Attention, there are changes here. Some sub-programs have an application stop from July 2025. Additionally, responsibility shifts to NRW.BANK in 2026, according to both mittelstand-innovativ-digital.nrw and NRW.BANK. Check the availability of lots in the monthly lottery procedure on a daily basis.

Deep Dive: Financing AI Solutions & Digital Consultation

Many companies fail to secure funding because they incorrectly 'label' their project. If you want funding in 2025, you should position your project not as 'purchase of software' but as 'process innovation through AI' or 'digital consulting.'

The Problem with 'Standard Software'

Most funding programs (like Bavaria's Digitalbonus Standard) exclude 'standard hardware' (laptops, tablets) and 'standard software' (Office 365, Windows). Why? The government doesn't want to finance basic equipment you need anyway. It wants to fund transformation.

The Solution: The 'Consultation-First' Approach

If you're introducing a complex solution – for example, an AI-powered consulting tool for your sales team or an AI chatbot for customer service like the AI assistant Sophie – that's not standard software. It's a change in your business processes.

How to argue for funding:

• Don't say: 'We're buying a chatbot license.' → Funding chance: Low (often seen as a standard subscription).
• Instead say: 'We're implementing AI-powered process optimization in customer service to reduce response times by 50%.' → Funding chance: High (e.g., Digitalbonus Plus or Digitalization Financing BW).

AI and the Research Allowance

Here lies the greatest potential for tech-savvy SMEs. If you don't just buy an AI solution 'off the shelf' but customize it to your data, train it, or develop interfaces – similar to what companies achieved with the KI Mitarbeiterin Flora:

• Training AI models with your own company data often qualifies as experimental development.
• Integration into your existing legacy IT (interface programming) can be eligible for funding.
• Advantage: As explained by innoscripta.com, you receive 25% of the personnel costs of your internal IT employees working on this project back.

Step-by-Step: Application Without Rejection

Rejection rates are high – usually due to formal errors. Follow this process to be on the safe side. Companies that have successfully implemented solutions like the AI Employee Theresa can attest to the importance of proper application procedures.

Step 1: Define the Project (BEFORE Purchase!)

The most important principle in funding law is: No premature start of measures. This means: You must not sign any contract, place any order, or make any down payment before the application has been submitted (and often approved).

• Exception: Consultation meetings for project planning are usually permitted.

Step 2: Check SME Status

Almost all programs are aimed at SMEs. Check whether you meet the EU definition:

• Employees: < 250
• Annual turnover: ≤ €50 million OR Balance sheet total: ≤ €43 million
• Important: Does your company belong to a group or does a corporation hold shares (>25%)? Then these figures are often added together, and you lose SME status!

Step 3: Choose the Right Program

• Do you only need consulting? → BAFA.
• Are you investing in Bavaria? → Digitalbonus.
• Are you investing in Baden-Württemberg? → L-Bank Digitalization Financing.
• Are you developing your own tech? → Research Allowance.

Step 4: Submit Application & Wait

Use the ELSTER certificate for Bavaria. For federal programs, often the 'Easy-Online' portal is required.

• Patience: Processing times are currently between 2 and 6 months (except for BAFA, which is faster).
• Tip: In some programs (e.g., Digitalbonus), you may start 'at your own risk' after receiving confirmation of receipt. It's better to wait for the grant notification (approval) to be sure.

Step 5: Proof of Use

After the project, you must submit invoices and payment receipts.

Eligibility Checklist for SME Funding

Before investing time in applications, verify your eligibility with this comprehensive checklist. Many businesses working with AI employees find this preliminary assessment saves considerable time and effort.

FAQ: Common Questions About Digitization Funding

Conclusion: Act Strategically, Not Passively

2025 is the year of selection. The days when you could get 50% from the government for every new website (go-digital) are over. But for companies pursuing real innovation – whether through AI integration, process automation, or intelligent product consultation systems – the funds are ready and waiting.

Our recommendations:

1. Use BAFA funding to have your digital strategy professionally planned (up to 80% subsidy).
2. For implementation, first check the state programs (Bavaria, Lower Saxony, Hesse).
3. Don't ignore the Research Allowance if you're making technical customizations.

Don't just invest in software. Invest in the intelligence of your business – the government will help you if you know where to knock. Whether you're ready to hire an AI employee or want to explore options through our AI employee platform, understanding the funding landscape is your first step toward subsidized digital transformation.

Companies implementing innovative solutions like AI Chat for customer engagement or managing social media inquiries through automation are exactly the kind of businesses these funding programs aim to support.