The ZIM is a government funding program specifically designed to provide financial support for innovative projects by small and medium-sized enterprises (SMEs) with a business location in Germany. Its goal is to strengthen SMEs in their research and development efforts. An essential requirement for ZIM funding is that the research or development "exceeds the worldwide state of the art in terms of specific functionalities, parameters, and features." The financial support enables companies to realize innovative ideas, develop new products, processes, or services, and thereby increase their competitiveness. ZIM is not limited to specific industries or technologies. The funding helps to reduce expenses for research and development and minimize entrepreneurial risk.

Eligible applicants are primarily small and medium-sized enterprises. Specifically, medium-sized companies may employ up to 250 employees. For cooperative projects, the number of employees can increase to 1,000. Additionally, non-commercial research institutions can participate as development partners in projects. Furthermore, research institutes, colleges, and universities engaged in research and technology can also apply for ZIM funding.

Company Size and Project Types

Under the Central Innovation Program for SMEs (ZIM), projects by companies focusing on the development of new products, processes, or technical services are supported. These projects must demonstrate a significant degree of innovation, be market-oriented, and involve technical risks.

Applications are divided into three project types:

1. Individual Projects

For individual projects, a company independently conducts research or development activities. Supported activities include company-specific research and development aimed at creating innovative products, processes, or technical services, without restrictions on specific technologies or industries.

Eligible entities include:

• Small Enterprises (SEs): up to 50 employees, turnover or balance sheet total up to €10 million.

• Medium Enterprises (MEs): up to 250 employees, turnover up to €50 million, or balance sheet total up to €43 million.

• Other medium-sized enterprises: up to 500 employees.

The funding rates vary accordingly.

Funding Rates for Individual Projects

The eligible costs for individual projects are capped at a maximum of €550,000. 2. Cooperation Projects

In ZIM Cooperation Projects, research and development are carried out with at least one other company and a research institution. The additional companies may also be based abroad (although they will not receive ZIM funding). The advantage of a ZIM Cooperation Project compared to a ZIM Individual Project is the higher funding rates.

Eligible entities include:

• Small Enterprises (SEs): Up to 50 employees, turnover or balance sheet total up to €10 million.

• Medium Enterprises (MEs): Up to 250 employees, turnover up to €50 million, or balance sheet total up to €43 million.

• Other medium-sized enterprises: Up to 500 employees or up to 1,000 employees (only in cooperation with SEs).

Funding rates vary as follows:

Research institutions are funded at a rate of 100%. Eligible costs are as follows:

• For companies: Up to €450,000 per sub-project.

• For research institutions: Up to €220,000 per sub-project.The total funding amount for an entire project is capped at a maximum of €2.3 million.

3. Innovation Networks

ZIM Innovation Networks consist of at least six independent small and medium-sized enterprises (SMEs) with a business location or branch in Germany. International innovation networks include at least four such companies as well as at least two foreign SMEs and a foreign institution acting as the partner for the German management entity. Additional partners may participate, such as research institutions, universities, large enterprises, and other entities like associations. Funding is provided through a multi-year staggered approach.

Eligible companies are the same as those for cooperation projects.

A key feature is the feasibility studies for the Central Innovation Program for SMEs (ZIM). During preliminary studies, a research project is evaluated for ZIM funding. This helps companies allocate internal resources or clarify cooperation with research organizations, serving as good preparation for the subsequent ZIM project. Costs of up to €100,000 are recognized for ZIM feasibility studies, with funding rates ranging from 50% to 70%.

Companies can expect a funding rate between 25% and 60% depending on the

project type and scope. The ZIM funding rate is influenced by the following factors:

• Company size (lower funding for firms with 50 to 250 employees)

• Region (higher funding in structurally weak regions)

• Type of project (individual or cooperation project) and whether it involves foreign partners

For individual projects, the maximum eligible cost for ZIM is €550,000, with funding between 25% and 45%. For cooperation projects, the maximum eligible cost is €450,000 per company and €220,000 per research institution, with funding between 30% and 55%.

Under ZIM, both personnel and material costs directly associated with the research and development project are reimbursed. These include salaries for research and development staff, material costs, patent rights, licenses, and more. Personnel costs can be calculated with a maximum annual salary of €120,000 per person. In principle, a maximum of 10.5 person-months per calendar year can be allocated per person. For managing directors, up to 50% of their standard working time can generally be considered.

In principle, it is possible to combine ZIM with other funding programs. However, it is essential to ensure that there is no double funding for the same cost items. It is advisable to inform yourself in advance about the conditions and, if necessary, seek consultation.

The application for ZIM funding must be submitted before the project begins. There are specific application forms that must be completed and submitted along with the necessary documents. It is important to note that the project can only start after the application has been submitted and approved.

The processing time for ZIM applications can vary, but it generally takes several weeks to a few months. We recommend submitting a ZIM application up to six months before the planned project start date.

ZIM funds research and development projects, which are naturally associated with risks. If the project is not successful or does not proceed as planned, this must be reported to the funding provider. This may affect the level of funding.

Companies that use ZIM funding are required to regularly report on the progress of the project. This includes both technical and financial reports. More detailed information can be found in the funding conditions and corresponding guidelines. After using the funds, a report must be submitted within three months of fulfilling the funding purpose, or no later than three months after the end of the approval period.

This consists of a factual report, which is a brief description of the project, and a numerical verification.

Companies in difficulty are not eligible to apply.

The funding recipient requests the necessary funds from the project sponsor. The funding is generally reimbursed retroactively upon request, in installments. It usually corresponds to the costs incurred in the past three months. Payments are made within one week.

The number of applications is not limited, but a maximum of two ZIM projects can be approved within a 12-month period (considering the funding limits)

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