ZIM: the central innovation programme for the Mittelstand

An R&D grant for mid-sized companies, up to 55% and non-repayable.

ZIM funds market-oriented R&D projects by small and medium-sized companies in Germany. Reform from 1 January 2026: simplified evidence for SMEs with fewer than 50 employees, a new overhead flat rate, and priority for sustainability, AI and quantum technology.

Eligibility

Status as a small or medium-sized company (the EU SME definition of up to 249 employees, extended to up to 499 for ZIM).
A research and development project with technological risk and a market-oriented goal.
An in-house R&D share (not purely contract research).
The financial capacity to fund your own share.
The project must start after the application is filed (no early project start).

Eligible costs

Staff costs for R&D personnel.
Overhead flat rate (2026 reform): 120% of staff costs, replacing the previous project-by-project itemised method, for SMEs with fewer than 50 employees.
External services and contract research at research institutions.
Project-related material and travel costs.
Depreciation on capital goods bought for the project (pro rata).

Common pitfalls

Starting the project early

Any project-related investment, staff assignment or contract before the application arrives disqualifies the project. On a strict reading, even studies or concept work count as starting the project.

SME status not cleanly documented

Linked companies (parents, sisters) are aggregated for the SME test. Anyone who ignores holdings above 25% may lose SME status retroactively, with clawback as the consequence.

No market relevance

ZIM requires clearly recognisable market potential. Purely academic projects are rejected. The application has to set out users, willingness to pay and a plausible go-to-market path.

Double funding with the Forschungszulage

For staff funded by ZIM, the Forschungszulage cannot additionally be claimed on the same costs. Clean cost separation in the accounts is mandatory.

The application process

1. Outline submission (optional). Some project management agencies offer a pre-check via a project outline. Worth doing as an early warning on whether the project is suitable for ZIM at all.
2. Full application. A detailed application through the agency's easy-Online portal: project description, cost and financing plan, milestones, exploitation plan.
3. Assessment. Technical assessment by external reviewers, judged on degree of innovation, technological risk, market potential and feasibility. Typically takes 3–5 months.
4. Funding decision. If the assessment is positive: a funding decision with ancillary conditions. The project may only start after the decision.
5. Delivery and evidence. Interim reports every 12 months, statements of use at the end of the project. Records must be kept for 10 years.

How upsmart helps

We structure ZIM applications around the agencies' assessment criteria: degree of innovation, risk, market. We keep track of interim report deadlines and statements of use, and make sure no double funding arises with the Forschungszulage or EXIST. On cooperation projects we bring the partners' budgets together into one application.

Combining it with other programmes

ZIM can be combined with the Forschungszulage, but not on the same costs. Cooperation projects with other SMEs or research institutions are possible. No parallel combination with EXIST for an identical project.

Frequently asked questions

Higher funding rates (up to 55% instead of the previous 45%), a new overhead flat rate (120% of staff costs instead of itemised evidence, for SMEs with fewer than 50 employees), and priority for sustainability, AI and quantum technology. The maximum grant per single project has been raised to €550,000.

ZIM addresses established SMEs with R&D capacity. For young startups still forming, the EXIST founder grant is the better entry point; ZIM comes after incorporation.

Typically 3–5 months from application to decision. Outline submissions are answered faster (around 6–8 weeks).

Justified extensions are possible but have to be formally requested from the project management agency. Without approval, funding lapses for the period after the original project end date.