New rules for loans to SMEs

Given that the financial crisis seriously affects SMEs and that banks do not easily grant loans to SMEs, a new act was adopted on 21 December 2013 that aims to better balance the relationship between the lender and the borrower as well as to ensure greater transparency to stimulate the access to credit.This act of 21 December 2013 about the financing of small and medium enterprises (M.B., 31 December 2013) only applies to enterprises, commercial or not, as well as to professionals, who meet the conditions laid down by article 15 § 1 of the Companies Code to be qualified as SMEs (those that do not exceed more than the following limits: 50 workers, € 7.3 million of sales and € 3.65 million of total assets). From now on, lenders will ask enterprises looking for credit and, where appropriate, to the person who grants a personal warranty, relevant information to assess the feasibility of the project for which the credit is claimed, financial statements, repayment capacity and current financial commitments. On its side, the company and the person who grants personal security must provide accurate and complete answers. The lender will then look for the type of loan that best suits the borrower. Otherwise, a court could order the conversion of the credit into another form of credit, without extra fees (with maintenance of the warranties provided). In case of refusal to grant a loan, the lender must inform the company of the reasons that justified the refusal. The act also addresses the issue of reinvestment allowances or “funding loss.” If the initial amount of credit does not exceed 1 million EUR, the funding loss may not exceed six months of interest calculated on the amount reimbursed at the rate specified in the contract. If the initial amount of credit exceeds 1 million EUR, the funding loss is contractually agreed between the lender and the company, in accordance with the method of calculation set out in the Code of Conduct agreed between the representative organizations and the organization of the credit sector (adopted on 16 January 2014, B.G. 4 March 2014). Article 1907bis of the Civil Code, which sets the reinvestment allowance to six months for loans with interest, however, continues to apply to such loans. Please contact Me Laurence van de Kerchove ( for more information. Sincerely, Cairn Legal Team