Digitalization Funding in BW: How SMEs Finance Their Software Project

Digitalization Funding in Baden-Württemberg: The Current State

Anyone who, as a small or medium-sized enterprise (SME) in Baden-Württemberg, plans a software project often asks: is there funding for this? In 2025 the answer has become more nuanced, because the instrument has changed.

A note up front: this article serves as general orientation and is not legal or financial advice. Programme conditions change, and only the official funding guidelines, together with the information from your house bank and the development bank, are binding.

From grant to financing: what changed

Until then, the Digitalisierungsprämie Plus was the central instrument: a grant for the digitalization projects of small businesses. According to the current state, this grant programme ended on 30 June 2025.

In its place, since 1 July 2025, comes the Digitalization Financing (Digitalisierungsfinanzierung). It is no longer a pure grant but combines a development loan in the house-bank procedure with a possible repayment subsidy. The L-Bank refinances these loans through the KfW ERP development loan for digitalization and improves the conditions for Baden-Württemberg. Depending on the funding tier, the repayment subsidy still carries the name Digitalisierungsprämie or is granted as an L-Bank subsidy.

The effect for SMEs: you finance the project via a low-interest loan, and a portion of the loan amount does not have to be repaid thanks to the repayment subsidy.

The most important point: apply BEFORE the project starts

There is one rule on which many projects fail if it is overlooked: the application must be filed before the project starts, and specifically via your house bank (Hausbank). Anyone who has already signed a delivery or service contract, or started the project, can generally no longer receive funding retroactively.

The start of the project is usually deemed to be the conclusion of a delivery or service contract attributable to execution. Planning and non-binding offers normally do not count, but in case of doubt the rule is: clarify first, then sign.

Step by step as an SME

1. Define the project. Describe the software project: goal, scope, planned investment, expected benefit. The clearer it is, the easier the funding assessment.
2. Obtain an offer. A solid, written offer from a service provider helps to quantify the investment amount.
3. Check eligibility. Read the current guideline of the Digitalization Financing and clarify early whether your project and your company meet the criteria.
4. Approach your house bank. The application runs through the house bank, which forwards the development loan to the development bank.
5. Apply BEFORE you start. Only after the funding application (and ideally after approval) should you award the contract and start the project.
6. Implement and document. Keep invoices, proof of services, and payment receipts in order.

Which projects typically fit?

Digitalization projects are broadly defined. In practice, they often include:

• Custom software to map your own processes
• Process automation and connecting existing systems
• Web and app development with a business purpose
• measures for IT security and data protection in the course of digitalization

Whether your specific project is eligible depends on the respective state of the programme. This too is why early coordination with the house bank and the development bank pays off.

In short

• The Digitalisierungsprämie Plus (grant) ended on 30 June 2025.
• Since 1 July 2025 there is the Digitalization Financing: a development loan plus a possible repayment subsidy, via the house bank.
• The application must be filed before the project starts.
• A clear concept and a solid offer make the path easier.

If you are planning a software project and would like to explore funding via the Digitalization Financing, I am happy to support you with a clear scope of services and a solid offer as the basis for your application. Feel free to get in touch. Please note: this article does not replace legal or financial advice.