In Belgium, most companies are SMEs, which means Small and Medium Enterprises. When they suffer from cash flow difficulties, it is not uncommon for a request for credit, over a short and determined period, to be necessary to compensate for the temporary lack of liquidity. Unfortunately, the subscription of such a loan is refused by many banks and brokers.
Focus on this subject.
Can an SME subscribe to a loan?
An SME has the right, legally, to obtain a loan. Nothing prevents it from taking the necessary steps. However, few banking or credit institutions agree to grant a loan to this type of business. The financial situation of the SME is often the cause. Indeed, the variation in commercial activity results and the instability of the firm’s income prevent the companies granting loans from getting a global idea of the SME’s work state.
What are the difficulties specific to SMEs?
Often, an SME’s activity works wonderfully. However, it is not uncommon for it to temporarily lack liquidity. The one-month deadline is therefore exceeded for invoice payments and sometimes extends up to three months. This phenomenon then leads to a series of difficulties. Thus, the company is obliged to apply for a loan to remedy the various problems encountered.
How to solve these difficulties?
Knowing that it is impossible to subscribe to a loan as a legal entity (that is, as a company), another solution is then possible: request the loan allocation as a natural person. From then on, the loan is taken out by the managers or administrators of the company. However, they are not, in most cases, employees but rather shareholders and also independents. Consequently, some difficulties will hinder the allocation of the credit.
What about credit for independents?
Just like for an SME, an independent person is legally authorized to obtain a loan. Concluding a credit is, however, complicated. Indeed, the instability of their income and the variation of their financial situation lead to many difficulties for this person, such as the non-visibility of their work state by the credit broker. Moreover, the payment deadline for their invoices also oscillates between one and three months.
At CPE, it is nevertheless possible to subscribe to a loan as an independent because our staff includes a specialist in this field. However, only mortgage loans are granted to independents thanks to the guarantee provided by the mortgage. To do this, the independent must be the owner of a property free of any charge or be a co-debtor with a person owning this type of property.