You are here

How to fund your business in Flanders: 7 popular options

In addition to a range of tax incentives and governmental support options, various other funding possibilities exist in Flanders. From self-funding and involving family, friends and fans to crowdfunding, venture capital, mezzanine financing as well as bank and non-bank financing: here are 7 popular funding strategies and how they work in Flanders.

1. Using your own funds

One of the quickest and easiest ways to get started is to use your own funds, if you have them. There are various reasons why this is an interesting option. For example:

  • Self-funding causes external financiers to trust your business idea because of your confidence in your start-up and the risks you are willing to take for it – which in turn leads to external financing.
  • Self-funding is essential as a buffer to deal with potential setbacks.

Note: depending on your sector, self-funding should be between 20% and 40% of your project in the form of cash or in-kind contributions.

2. Involving family, friends and fans

There are three ways of involving family, friends and fans in the start-up of your Flanders-based enterprise:

  • co-shareholders – involve people in your environment to finance your project by making them co-shareholders;
  • borrowing – borrow money from family, friends and fans (this will be considered a quasi-entity by other creditors, if the lender declares this loan subordinate to the other creditors);
  • win-win loans – with this type of loan, the government of Flanders actively supports you when involving family, friends and fans in funding your business.

Zooming in on win-win loans

Flanders offers support for win-win loans by providing an annual tax discount of 2.5% (on the amount of the loan) to those who grant an 8-year loan of 50,000 euros or more to friends, family members or acquaintances who own a company in Flanders.

Borrowers should know that win-win loans:  

  • make it easier for you to find start-up capital;
  • are subordinated, must amount to a maximum of EUR 200,000 and must run for 8 years (borrowers must repay once after 8 years, or choose monthly, quarterly, biannual or annual repayments);
  • are available to independent SMEs with fewer than 250 employees and annual turnovers below EUR 50 million, or a balance sheet total below EUR 43 million.

(Note: ‘independent’ means that, if there is a relationship of participation with other enterprises of 25% or more of the capital of voting rights, the SME’s consolidated figures must satisfy the criteria mentioned above. A larger shareholdership by risk capital companies, universities or non-profit research centers is also permitted.)

Lenders should know that they:

  • must be a natural person living in Flanders who arranges the WIN-WIN loan outside the framework of his or her professional activities.
  • may not be an employee of the borrower.
  • may not be the spouse or the legally cohabiting partner of the borrower if the latter is self-employed.
  • may not be a borrower of another WIN-WIN loan for the entire duration of the WIN-WIN loan.

(Good to know: if the borrower is a company, the lender may not be a manager, director or shareholder of that company, or a spouse or legally cohabitating partner of one of them.)

3. Crowdfunding

Crowdfunding allows you to get the first part of your required financing online. Below are just a handful of crowdfunding platforms available in Flanders:

  • www.angel.me – offers support to innovative start-ups in many sectors through equity or reward;
  • www.bolero-crowdfunding.be – targets financial investments such as equities or bonds;
  • www.crowdfunding.gent – is operated by the city of Ghent and offers financial support through donations or in exchange for symbolic attention;
  • www.lookandfin.be – targets growing SMEs and provides funding through loans exclusively;
  • www.spreds.com – acts as an investment platform for the general public and private investors;
  • www.socrowd.be – attracts private capital for sustainable initiatives in the social, cultural and healthcare industries.

4. Venture capital

Venture capital is mainly for businesses that can show clearly that they have quite a bit of growth potential, as this type of funding depends on venture capitalists’ calculation of their returns on investment. While it comes in several forms, there are three main types of venture capitalists:

  • public venture capitalists (governmental entities);
  • private venture capitalists (often affiliated with banks or large financial groups);
  • business angels (private individuals).

Zooming in on the latter category, the Business Angels Network (BAN) Flanders is one of the main go-to organizations. This network is the result of a fusion of four Flanders-based BANs and has the support of the government of Flanders. Overall, BAN Flanders coordinates interactions between anonymous informal investors and promising companies. It also provides venture capital to young, starting and growing enterprises that are not in the retail, catering or project development industries.  

5. Mezzanine financing

Suitable for established companies, mezzanine financing is a mix of debt and equity financing. The government of Flanders offers two types of mezzanine financing; one for small enterprises and another for rapid-growth, extremely innovative companies.

PMV – Innovation Mezzanine  PMV – Growth Mezzanine 

Target companies:

  • Small enterprises no older than 6 years (from the date of the application) in no difficulties with a set of operations in Flanders.

Must have received a subsidy from Flanders Innovation & Entrepreneurship for a research or development project. 

Target companies:

  • High-growth, innovative companies with a sustainable competitive advantage, known as “gazelles”.
  • Must have a seat of operations in Flanders.
  • Must have a balanced management team and a strong record of cash-flow generation.

Must be able to submit a solid business plan that demonstrates an ambition to grow and the ability to repay debts.

Funding:

  • Subordinated loan up to a maximum of EUR 500,000.
  • Term of 6 years, with no interest payments during the first 2 years.
  • Capital repayments begin in the fifth year.
  • Fixed interest rate determined by the company’s risk profile.

The amount of the loan increased by the total amount of the VLAIO grant must not exceed 80% of the total project budget approved by the IWT.

Funding:

  • Subordinated loan between EUR 500,000 and EUR 5 million.
  • Has a maximum term of 10 years, with 7 being the average.
  • Fixed interested must be paid quarterly, plus variable or deferred interest.

A share component in the form of a conversion option or warrant may be included depending on the type of company.

6. Bank financing

Many banks in Flanders offer government support to start-ups, awarded in several forms with different requirements. Such programs include Starteo, Optimeo, ‘impulskredieten’, guarantee schemes and GIGARANT. Below are the details of these bank-sponsored financing options.

Starteo

The Starteo program is available to start-ups younger than 4 years. A subordinated loan of 5, 7 or 10 years with a prime interest rate of 3%, it allows for the possibility of capital investment reimbursement exemption from 1 to 2 years.

Conditions:

  • Entrepreneurs must contribute at least 10% of the global investment, with a maximum of EUR 250,000 limited to the amount provided by the financial institution and/or 4 times the entrepreneur’s input. 
  • Maximum of EUR 350,000 in shares acquisition, limited to 35% of the value of the transaction if this amount exceeds EUR 250,000.

Optimeo

Optimeo offers the same possibilities as Starteo to self-employed people, SMEs and professionals who want to finance the expansion of their business. Note that your business needs to have been active for over 4 years in order to be eligible.

Investeringskrediet EIB

Offered by the European Investment Bank (EIB) and its partners, Belfius, BNP Paribas Fortis, ING and KBC, this investment credit scheme includes tangible and intangible investments within the EU of less than EUR 25 million (excluding purchase of land, pure financial transactions or the refinancing of existing loans).

It aims to support investment projects of European SMEs of fewer than 250 employees, as well as mid-sized enterprises of fewer than 3000 employees. 

Note: this option is not available to subsidiaries and holdings of industrial groups or enterprises active in the tobacco, ammunition, weapons or gambling sectors.

Impulskredieten

‘Impulskredieten’ are microcredit schemes that do not involve bank loans. They are available through Hefboom, a non-profit organization that offers investment opportunities to individuals, companies, associations and public authorities. 

Guarantee Scheme (Waarborgregeling)

The ‘Waarborgregeling’ gives banks the option of having up to 75% of a loan guaranteed by the government. This guarantee scheme:

  • is available to self-employed people, liberal professions, nonprofits, SMEs, large enterprises and foreign projects of companies located in Flanders;
  • involves a guarantee amount of up to EUR 1.5 million, with a one-off premium paid by the business;
  • enables negotiation between the bank and the business;
  • offers flexible conditions for SMEs inconvenienced by public works.

GIGARANT

Complementary to the Guarantee Scheme, GIGARANT always involves an amount larger than EUR 1.5 million, covering up to 80% of the underlying funding amounts with a maximum duration of 8 years. This financing scheme:

  • is granted to small, medium-sized and large enterprises that are not in difficulty at the time of the guarantee and not active in the fishing or agricultural sectors;
  • must be used within Flanders or to finance the activities of a seat of operations in Flanders;
  • may not be used to pay remuneration in any way to the shareholders or management (except based on existing market level agreements).

7. Non-bank financing (leasing)

In Flanders, non-bank financing is available to companies in the form of leasing. Here’s what you should know:

  • Only officially accredited leasing companies accredited as guarantee holders that have signed a framework agreement with Waarborgbeheer can bring undertakings under the guarantee.
  • Leasing companies decide on a guarantee amount up to EUR 500,000 regardless of the loan amount; for guarantees above EUR 500,000, the leasing company must obtain a ministerial authorization for approval.
  • The maximum guarantee value is EUR 1,500,000.
  • This funding option excludes sale and lease back constructions, vendor leases and private cars.
  • There are different types of leasing guarantees:
    • property leasing on-balance: long-term rights of use to built-on real estate at the disposal of the enterprise;
    • property leasing off-balance: built-on real estate is not covered by property leasing on-balance;
    • plant leasing on-balance: rights of use over moveable property at the disposal of the enterprise;
    • plant leasing off-balance: moveable property not covered by financial plant leasing.

Interested in doing business in Flanders?

Let us help you!

  • We can introduce you to other companies, banks and regulators
  • We organize site visits to real estate locations
  • We assist with all legal aspects of setting up a business
  • We're an official government agency
  • Our services are completely free
  • We are a team of international experts

Receive our handbook to growing your business in Flanders

  • It's completely free.
  • Get an overview of all incentives relevant to your company.
  • Tax system explained in-depth.
  • Learn how to set up your business quickly.
  • Discover the benefits of Flanders (in addition to the chocolate).

In addition to the ebook, I agree to receive one or two follow-up emails