Digitalization Funding: Who Gets Funded and Who Does Not?

Digitalization funding in 2026 goes primarily to small and medium-sized enterprises in the commercial economy: fewer than 250 employees, at most 50 million euros in annual turnover or 43 million euros in balance sheet total. Not funded, on the other hand, are companies in difficulty, most associations and non-profit organizations, consulting firms applying on their own behalf, and any company that submits the application only after the project has started. The details lie between these two poles, and that is exactly where most applications fail.

Who actually counts as an eligible SME?

Almost all programs use the EU definition of an SME: fewer than 250 employees and at most 50 million euros in turnover or 43 million euros in balance sheet total, calculated including affiliated companies. Some programs set a narrower limit. The new AI Funding MV applies only to companies with up to 100 employees, and the digitalization funding of the WTSH in Schleswig-Holstein only to small companies with fewer than 50 employees. Anyone close to a threshold should calculate carefully before applying, because partner companies and shareholdings count as well.

Which companies fall through the cracks?

The exclusions are similar across the programs but not identical. The most important cases from the guidelines:

• Companies in difficulty: anyone who meets the EU criteria for a company in economic difficulty or is in insolvency is excluded practically everywhere.
• Companies that are too young: the INQA coaching program requires at least two years on the market and at least one full-time employee subject to social security contributions in the last financial year.
• Consultants advising on their own behalf: consulting firms cannot receive BAFA consulting funding for themselves, and anyone who advises on personnel and organizational matters themselves is also excluded from INQA coaching.
• Associations and non-profit organizations: BAFA funding is aimed at economically active companies, non-profit organizations are left out.
• Companies exempt from trade tax: state funding in MV under the FuEuI guideline requires a company belonging to the commercial economy.

Why the region determines the funding rate

For the BAFA funding for management consulting the subsidy depends on the location: 80 percent of consulting costs in the new federal states including Mecklenburg-Vorpommern, 60 percent in the Lüneburg region, 50 percent in the rest of the federal territory, each based on a maximum assessment base of 3,500 euros. State programs additionally require a place of business in the respective state. A company from Wismar therefore receives up to 2,800 euros in funding for the same consulting, a company from Hamburg 1,750 euros, but can use the Hamburg Digital Check instead.

Why applications fail in practice

The most common cause is timing: the application must be submitted before the project starts, and a signed contract already counts as the start. After that come the hidden limits. The FuEuI guideline in MV does not approve grants below 15,000 euros, so small consulting projects simply do not fit. And finally, the wrong pot: BAFA funding pays for conceptual consulting but not technical implementation, while state programs such as AI Funding MV conversely fund the introduction including software but not a pure strategy paper. In our initial analyses, mixing up the funding pot is the most common reason companies report rejected applications.

If you are facing this sorting question: The AI Consulting from NordFlux starts with a free funding check that reviews the project, company size and location against the open programs. Our article BAFA Application Step by Step.

Frequently asked questions about digitalization funding

Are sole proprietors also funded?

Partially. BAFA consulting funding is also open to freelancers and sole proprietors, as is the Bremen program Digital SME AI. The INQA coaching program, on the other hand, requires at least one employee subject to social security contributions, so pure sole proprietorships are excluded there.

Does my company with 260 employees still count as an SME?

No, with 250 or more employees a company no longer counts as an SME under the EU definition and falls out of most grant programs. What remains open then are mainly loan programs such as the KfW ERP funding loan for digitalization, which extends up to 500 million euros in group turnover, as well as the research allowance, which has no size limit.

Can a company receive several types of funding at the same time?

Not for the same costs, double funding is excluded. What is common and permitted is staggering different projects: first a funded strategy consultation via BAFA, then the implementation via a state program or a low-interest loan. For BAFA, the additional limit of two consultations per year and five in total by the end of 2026 also applies.

What happens if the application is submitted too late?

Then the entitlement is lost entirely, even for a project that is perfect in content. What matters is the start of the project: as soon as a supply or service contract is signed, the project counts as started. Obtaining quotes, planning and calculating, on the other hand, is permitted and does not harm the application.