How to finance your business

Key takeaways for financing your business

• Your project’s viability depends on securing startup capital. 
• Startup capital is often a mix of personal funds and external financing. 
• External funding options include support from your network, crowdfunding, bank loans, or public grants and subsidies. 
• Financial planning and strategy are essential - this requires developing a business plan or financial plan.

What is start-up capital and why is it so important?

Start-up capital refers to the initial funds you need to get your business off the ground and cover essential financial needs. This includes expenses such as purchasing equipment, financing premises, and covering administrative costs.  

Building up this starting capital is a crucial step in creating a company, as these funds finance vital investments and support the smooth operation of the business before it begins to generate sufficient revenue. 

Adequate startup capital also reassures financial partners and investors, as it demonstrates the entrepreneur’s commitment and credibility. Additionally, it reduces excessive reliance on debt, helping safeguard the company’s financial health. 

How to finance your business with your own resources

The easiest way to finance your business is often to use your personal savings. Many entrepreneurs choose to self-fund their ventures, which allows them to maintain full control and avoid the pressure of loan repayments. However, it's important not to invest all your savings into the business. Ideally, you should aim to finance between 20% and 40% of your start-up capital with your own equity.  

Striking the right balance between safeguarding your personal financial security and investing enough equity is crucial. This approach minimises the impact on your private wealth while signalling to potential investors and partners your strong commitment to the project's success.

How can your network help build initial capital?

In business terminology, this approach is often referred to as the ‘3Fs’ - Family, Friends, and Fools. Many entrepreneurs rely on their close network of family members and friends to kickstart their ventures. This support can come in the form of a direct contribution to the company's capital or as a loan. When structured as a loan between relatives, the individual lender plays a crucial role by providing necessary funds while accepting a certain level of financial risk. Such loans are treated as business loans and may qualify for specific tax benefits and regulatory conditions depending on the region, including: 

• The Proxi Loan in Brussels 
• The Coup de Pouce Loan in Wallonia 
• The Win-Win Loan in Flanders

What is crowdfunding and how can it strengthen your financing?

Crowdfunding enables you to reach out to the general public to raise your start-up capital. It brings together a large number of contributors who each participate in the success of your business. There are 4 main types of crowdfunding: 

• Donation crowdfunding: contributors give money out of conviction or support and expect nothing in return. 
• Reward crowdfunding: contributors receive a non-financial reward, such as a product or service, in exchange for their support. 
• Loan crowdfunding (crowdlending): you borrow money from the public and commit to repaying the principal along with agreed-upon interest over a specified period, allowing you to manage repayment schedules effectively. 
• Equity crowdfunding: your start-up welcomes new shareholders by exchanging equity for investment, giving contributors an ownership stake in your company.

How to apply for a business loan?

Professional credit granted by specialised organisations, institutions, and banks is a common and effective solution for financing a new business. To obtain these bank loans, which are specifically designed for the self-employed and companies, you must demonstrate the strength of your project through sufficient equity, tangible assets to be financed, or a convincing business plan.  

Whether it's investment credit, instalment loans, lines of credit, or factoring, your bank will typically offer financing options tailored to your needs at every stage - before, during, or after your start-up phase.

An additional benefit is that both the application fees and interest on your loan are fully tax-deductible, helping to offset the impact of potential interest rate increases. 

Need a bank loan to launch your business? Explore BNP Paribas Fortis' professional financing solutions and contact the Easy Starters Team at +32 433 42 86 or book an appointment. 

What grants and subsidies are available for start-ups in Belgium?

Brussels, Wallonia, and Flanders: the 3 regions have set up support and funding mechanisms for entrepreneurs, both during the start-up phase and to support their growth. Depending on your project, you may also turn to the European Union and its support funds. 

Brussels 

For the Brussels-Capital Region, visit the website 1819.brussels. Additionally, Innoviris provides a comprehensive overview of support available for innovative companies in Brussels. 

Wallonia 

Wallonia supports entrepreneurs through platforms like Midas, the main portal for subsidies, financing, and public aid. Wallonie Entreprendre (WE) offers personalised, end-to-end support for entrepreneurial projects, covering everything from business creation and development to company acquisition and intellectual property protection. 

Flanders 

In Flanders, the Flemish Agency for Innovation and Entrepreneurship (Vlaio.be) serves as the primary contact for regional aid and support programmes. Vlaio lists a wide range of financing options for companies and start-ups, including traditional loans and access to venture capital firms. 

European Union 

The European Union provides numerous funds to support ambitious projects, especially those focused on priority sectors and economic or environmental transition. Application processes differ by EU Member State. Entrepreneurs can consult the list of intermediaries for Belgium to connect with networks and experts who assist in securing European subsidies. 

Financial planning: how to choose the right options for your business? 

Once you’ve identified your funding sources and before launching your business, you’ll need to focus on financial planning. 

Finding the right mix of financing 

To select the optimal combination of financing solutions, carefully analyse your project’s specific needs. Consider the investments required to start or expand your business, assess the resources currently available to you, and determine which forms of financing will be necessary to bridge any gaps in your budget. 

The financial plan: your key to effective cash management 

Creating a robust financial plan involves disciplined cash management, anticipating the effects of debt on your business structure, and securing your investments. This approach helps you avoid unexpected setbacks, enhances your chances of success, and ensures the long-term sustainability of your business. 

How can BNP Paribas Fortis support your business project and its financing?

At BNP Paribas Fortis, we support you before, during, and after your company's creation, offering advice tailored to your unique situation: 

• Discover how we assist start-up entrepreneurs. 
• Compare our different business banking accounts and packages. 
• Discover how the HannaGo software can help you draft your financial plan.