Financial credits

What is meant by financial credit?

Credit, and particularly financial credit, is one of the main sources of funding for a company, together with capital and self-financing.

Financial credits are often simply called credits or financing (while the concept of financing is clearly broader).

Among financial credits, there are credits intended for the long-term financing of the company:

• Mandatory loan (not subordinated)
• Hybrid credit (often associated with equity)
• Subordinated loan
• Classic loan (investment credit, instalment operation, etc.)
• Leasing or finance-lease debt

And in the short-term:

• Fixed-term advances (straight loans)
• Factoring
• Overdraft

The common characteristics of these credits are that they lead to the payment of interest and have a repayment obligation (with some nuances for leasing and factoring).

Providers of financial credits

Financial credits are often provided by specialist companies (or via the latter), members of the Belgian Financial Sector Federation (Febelfin) and subject to the FSMA (formerly CBFA), the regulation authority.

We distinguish the following from specialist providers of financial credits:

• Credit establishments or banks, members of the Belgian Bankers' and Stockbroking Firms' Association (ABB)
• Leasing companies, members of the Belgian Leasing Association (ABL)
• Factoring companies

Some of these credits may also be granted by public institutions, such as finance & invest.brussels

Some rules and principles to consider when financing your company with credit

It is important to:

• understand certain financial notions relating to the different sources of financing of a company, and how this translates into a liability on the balance sheet
• identify types of financing needs
• assess the level of this financing need
• choose and weight the sources and forms of financing
• evaluate the type and level of guarantee required
• optimise access to sources of financing

How to do it? Read our article "How to finance your business".

Alternative credits or specific credits

Some public or private institutions offer alternative and/or specific financing, whether this be in social, sustainable development or other terms. This often corresponds to micro-credit.

In terms of the Brussels authorities, we can mention Brusoc, which offers financing adapted to social economy projects as well as local economy projects.  

The private market also includes several stakeholders in the alternative financing sector, such as Crédal, which offers credits to companies active in the social economy.

We can also mention Triodos, which finances companies offering added value in social, ecological or cultural terms.

Finally, some crowdfunding platforms are specifically dedicated to projects of this type.