Business bank loan: how to prepare your application

A business loan application is based on a business plan, a cash flow forecast, and supporting documents. For a startup project, Bpifrance Création generally advises balancing equity and debt (50/50); the bank may reduce its equity requirement to an average of 30%. The banker primarily considers the company's ability to repay. They will typically require the entrepreneur to provide guarantees or a personal surety.

This page describes the application process. It does not provide any interest rates or specific loan terms: financing is secured through a referral to our banking partners, who review each application individually. Its primary source, Bpifrance Création, is aimed at business creators. It does not cover loans backed by Bpifrance support, borrower's insurance, or criteria specific to established businesses.

What the banker is looking at

Bpifrance Création states that the decision to grant a loan is based on concrete elements of the business plan. Two points stand out:

• The banker primarily looks at the company's ability to repay its loan; ;
• The ability of managers to manage and develop the business is paramount.

A lack of equity will be considered a deal-breaker by the banker, according to the same source.

The documents in the file

The presentation file must be complete, accurate, clear, and well-presented, according to Bpifrance Création. The exact set of documents required depends on the bank: ask them for the list before preparing your application.

The contribution

Bpifrance Création states that, as a general rule, it is advisable to balance equity and debt as closely as possible (50/50). However, the bank may reduce its equity requirement to an average ratio of 30, meaning 70,000 debt to 30,000 equity. According to the same source, the larger the initial investment, the greater the chances of obtaining the loan. The page discusses business creation: these are guidelines, not a rule applicable to all projects.

The manager's guarantees and surety

Bpifrance Création states that banks generally require collateral or a personal guarantee from the entrepreneur. For the acquisition of movable property, they typically use a pledge. A personal guarantee is also required from the project leader.

Before signing a guarantee, here are the rules that the official pages state:

• The handwritten note. According to service-public.gouv.fr, an individual guarantor must handwrite a statement indicating their commitment. A company acting as guarantor is not subject to this requirement.
• The disproportion. In the event of a disproportionate commitment, the amount of the commitment is reduced (service-public.gouv.fr).
• The maximum amount. According to Bpifrance Création, the document must mention the maximum amount of the commitment.
• Annual information. Before March 31 of each year, the creditor must inform the individual guarantor of the sums remaining due on the preceding December 31 (service-public.gouv.fr).
• The payment incident. The bank must inform the guarantor of a payment incident (service-public.gouv.fr, economie.gouv.fr); the deadline should be checked in the applicable text.

The service-public.gouv.fr document dates from February 2023: please reread it before signing.

Duration and nature of the financed assets

Loans typically have a term of between two and seven years. Banks tend to favor financing durable goods (vehicles, computer equipment, machine tools, etc.) and are less likely to grant the capital needed to finance the business activity itself. Bpifrance Création also mentions interest-free loans to supplement equity and microloans for professionals, although this page does not detail the specific terms and conditions for these loans.

Costs to compare

A loan involves interest, loan insurance, and additional fees: application fees, guarantee fees, and, if applicable, brokerage fees. Compare these costs across different offers, not just one. This page does not provide any interest rates.

Put the banks in competition

According to Bpifrance Création, comparing offers from different agencies allows you to negotiate more favorable terms or less restrictive clauses. A "banking pool" refers to several banks financing the same project. Balmont Conseil connects you with its banking partners; they review your application and set their terms.

If the bank reduces or refuses

• Reduction of a cash credit. According to economie.gouv.fr (2020 page), a bank that decides to reduce or terminate an open-ended overdraft facility must notify the bank in writing, with a minimum of 60 days' notice. This notice period is not required in cases of serious misconduct by the company, nor when its financial situation is definitively compromised. This page is outdated: please review it.
• Business credit mediation. This is a free service, managed by the Bank of France, available to any company facing difficulties obtaining bank financing or trade credit insurance. Applications are submitted online, including the SIREN number, number of employees, financial information, and cash flow forecast for the next six months. Initial contact is made within 48 hours of submission; the bank has five business days to review its decision; the application can be supplemented or modified for ten days.

Business loan: numerical example (fictitious profile)

Situation. Léa creates a fictitious company. Her total need is €150,000: €60,000 for equipment, €25,000 for work, €15,000 for stock and €50,000 for start-up cash.

Issue. How much should she bring, and how much should she ask the bank for?

Strategy. Assumption: The bank accepts a down payment of 30,000 euros (70,000 euros of debt), the average ratio cited by Bpifrance Création; with the generally recommended 50/50 split, the down payment would be higher. The bank prepares a 3-year business plan, a cash flow forecast justifying its €50,000 in start-up capital, and equipment quotes.

Result. Contribution: €150,000 × 30 % = €45,000. Loan: €150,000 × 70 % = €105,000. The sum yields €150,000. With a 50/50 split, the contribution would be €75,000 and the loan of €75,000.

These figures illustrate an order of magnitude. They do not indicate whether the bank will grant the loan, nor under what conditions. The profile is fictitious.

Business loan: what changes depending on your situation

• Start-up or established business : the primary source is aimed at creation.
• The nature of the need durable good or cash flow need.
• Your contribution and your personal circumstances, which affect the required deposit.
• The bank and the type of loan Parts and conditions vary.
• Your status legal form, remuneration, social protection.

The rule depends on your situation. No results are guaranteed.