Financing your company with personal contributions
What do we mean by own contribution?
These are funds invested in the company by the entrepreneur(s) initiating the project. These funds can be invested as capital (if the activity is exercised as a company) or in the form of credit.
- The funds can be provided by the entrepreneur directly, or by a company under their control.
- The own contribution in the form of credit is generally for activities exercised as a self-employed worker or asbl (due to the absence of capital).
- The own contribution is to be considered in opposition to funds from external investors, whether they invest in the form of capital or credit.
- This concept of own contribution is not to be confused with the concept of own contribution linked to financing by credit.
Why a personal investment?
Financing a company represents a real risk. So, it is logical that the entrepreneur is the first to invest in his project and bear the risks before requesting external funds.
The personal investment improves the credibility of the project by offering a certain degree of "commitment" from the entrepreneur, and may constitute a lever effect for obtaining additional financing.
What sources of personal investment are there?
Sources directly linked to the entrepreneur:
- Personal Savings: Includes income from various sources such as professional earnings, financial investments, property income, gifts, and inheritances.
- Company Funds: Funds available and mobilizable from companies controlled by the entrepreneur.
Sources indirectly linked to the entrepreneur:
- Friends and Family Funding (The "3Fs": Family, Friends & Fools): these funds are typically provided based on personal relationships rather than strict financial criteria. To avoid potential conflicts, entrepreneurs should:
- Prepare a comprehensive financial and strategic document, similar to a bank loan application, demonstrating honesty about repayment capabilities.
- Create a written agreement specifying loan amount, duration, repayment conditions, and contingency plans.
- Consider options like the Proxi loan (for Brussels Region residents), which offers formalized lending and potential tax advantages.
- Be willing to pay reasonable interest, recognizing that the primary benefit is accessing funds without requiring traditional collateral.
External sources:
- Loans: Public or private loans specifically designed to support company creation, such as loans from finance&invest.brussels.
- Grants and Premiums: Financial support provided to assist entrepreneurs in establishing their business.
Note: External funding sources have strict qualification requirements and are typically supplementary to the entrepreneur's personal investments.
What should I do if I have insufficient personal resources?
It is not uncommon, after a first assessment of the resources required for a company project, for the entrepreneur to realise that he/she does not have sufficient resources to launch his/her business as originally planned.
There are three possible alternatives for this individual:
- obtaining additional funds through one or more sources of personal funds
- finding an investor partner, or resorting to external investors (private or public risk capital)
- adapting the project to the resources available, for example by:
- reducing its size
- postponing certain investments
- opting for less "intensive capital"
- opting to launch as a self-employed worker rather than a company, etc.
Who can help me ?
