Financial support measures PMV: what is the start-up loan and co-financing(+)?

Participatiemaatschappij Vlaanderen (PMV) offers a range of alternative financing for start-ups and mature companies. PMV's goal is to be able to finance any promising project in Flanders through various solutions.

Below we provide the modalities of the most frequently used standard financing from PMV's offering, the start-up loan and co-financing(+).

Starter Loan

What is a start-up loan?

The start-up loan is a subordinated loan with an interest rate of 3% and for an amount of up to EUR 100,000 intended for companies and self-employed people who have been operating for up to 4 years. The term of a start-up loan is a minimum of 3 years and a maximum of 10 years.

The maximum start-up loan that can be applied for is the smallest amount of the 2 options below:

• 100,000 EUR
• 4 x the own contribution

An exemption from capital repayment is provided with a term of:

• 1 year: standard arrangement
• 2 years: Subject to substantiation and to adjustment of interest rate to 3.25%

Why take out a start-up loan?

• Alternative to bank financing: Banks are risk-averse and sometimes hard to grant financing to startups, a startup loan can provide a solution to obtain additional financing in a startup phase.
• Cost savings: The interest rate on a start-up loan is 3%. This is substantially lower than the interest rates obtained in the current climate for bank financing, especially for start-up financing.

Co-financing & co-financing +

What is co-financing?

Co-funding

The co-financing is a subordinated loan with an interest rate of 3% and for an amount of up to EUR 350,000 intended for start-ups and existing companies. The term of a co-financing is minimum 3 years and maximum 10 years.

The maximum co-financing that can be requested is the smallest amount of the 3 possibilities below:

• EUR 350,000
• 4 x the own contribution
• 50% of total financing requirements.

An exemption from capital repayment is provided with a term of:

• 1 year: standard arrangement
• 2 years: Subject to substantiation and to adjustment of interest rate to 3.25%
• 3 years: In case of acquisition financing, substantiation and adjustment of interest rate to 3.5%

A co-financing can be used for:

• Classic investments (e.g., purchases of real estate or cars)
• Financing working capital (e.g., inventory purchases)
• An acquisition in which the acquirer holds more than 50% of the shares after the acquisition

Co-financing+

The co-financing+ is a similar solution available only to existing companies with a positive cash flow and therefore not to start-ups. The amount of co-financing+ is a minimum of EUR 350,000 and a maximum of EUR 700,000, with an interest rate of 4.75%.

The maximum co-financing+ that can be requested is the smallest amount of the 3 possibilities below:

• EUR 700,000
• 4 x the own contribution

An exemption from capital repayment is provided with a term of:

• 1 year: standard arrangement
• 2 years: Subject to substantiation and interest rate adjustment to 5%
• 3 years: Upon acquisition financing, substantiation and adjustment of interest rate to 5.25%

Why engage in co-financing?

A co-financing is always combined with another credit, by one or more co-financiers from the list of parties below:

• A bank credit
• An investment fund with which PMV has a cooperation agreement,
• One or more business angels, at least 1 of whom is a member of BAN Flanders

Co-financing is used primarily for 2 purposes:

• Risk distribution: If one financier finds the risk too great, the total credit burden can be divided among several parties through co-financing, thereby reducing the riskiness of the financing.
• Cost savings (non co-financing+): The interest rate of a co-financing is 3%. This is substantially lower than the interest rates obtained from bank financing in the current climate. Using co-financing can reduce the total interest burden of the desired financing.

The funding mix of a co-financing should relate as follows:

• The cofinancier should vouch for at least 20% of the overall funding requirement.
• PMV intervenes for up to 50 % of global investment needs.
• The equity contribution is at least 10% of the total financing requirement.

How can I obtain a start-up loan or co-financing?

Please note that there are 2 general conditions for obtaining funding through PMV:

• only SMEs & non-profit organizations with an economic activity are eligible for a start-up loan and co-financing / co-financing+
• Certain sectors are excluded by default, for example:
  • Fisheries and aquaculture
  • Cultivation of agricultural products
  • Arms trade, tobacco industry, gambling industry

To apply for a start-up loan or co-financing, a file must be submitted through the online application of PMV. The application can be submitted by the applicant company or by an approved provider, including Titeca and most major banks.

A financial plan will be prepared which will be reviewed by a PMV credit analyst for repayment capacity and completeness. It is therefore important to provide PMV with a substantiated file to maximize the chances of success of your file.

A lead time of about 10 weeks from application to release of funds should be considered.

Finally, it is also important to note that the above maximum amounts for the start-up loan, co-financing and co-financing+ . The total maximum amount to be borrowed for these PMV measures combined is EUR 350,000 for start-ups and EUR 700,000 for companies that can already demonstrate a positive cash flow.

Wish you had another quick overview about these three forms of financing? Check out the table below!

Do not hesitate to contact us here contact us with questions.

Would you like a conversation about the right approach for your business?  Then make an appointment here with our pro experts!