Starting a business: best alternatives to bank loans 💲

Do you want to create your business or expand and you have trouble getting a loan from your bank? There are other ways to obtain financing! Business angels, participative financing, microcredit, etc. An overview of alternative solutions.

bank loan alternatives

Fundraising with your friends and family

This is often the first idea when you are looking for financing: to appeal to your relatives. These funds collected from family members, friends, and other relations are called love money. They allow you to benefit from tax exemptions or reductions.

Within the family, the beneficiary of a gift can receive up to €31,865 without having to pay taxes. Provided that :

·         the donor is under 80 years of age

·         the beneficiary is the donor's child, grandchild or great-grandchild (or nephew or niece if the donor has no descendants)

·         whether the beneficiary is of age or emancipated.

This donation must be the subject of a notarized deed, a private deed or a declaration of donation. The beneficiary must notify his or her public finance center within one month.


Honorary loans

If your search for financing concerns a business creation or takeover, or if you are a young manager, you can turn to an honorary loan. It is a loan without guarantee or personal surety, generally at zero interest, and registered in equity. The amount can reach 90 000 € for innovative projects.

This type of loan is offered by several support networks, such as Initiative France, Réseau Entreprendre or the Association pour le droit à l'initiative économique (Adie).

Obtained after selection by a jury of professionals, the honorary loans can also bring credibility to your project and facilitate obtaining bank financing. "The honorary loan has a significant leverage effect," says Initiative France. "For every €1 of honorary loan, banks grant an average of €7.5 in additional financing".

 Also read: Moments where being a Billionaire was too easy


Designed specifically for people who have difficulty accessing bank financing, microcredit is aimed at creating, taking over or consolidating a business. The goal is to enable project holders to create or sustain their own jobs. In addition to the loan, this system is accompanied by a follow-up of the beneficiaries: assistance in the administrative procedures, help in the control of the costs, commercial development etc.

Microcredits are generally offered by associations. For example, Adie offers a financing plan of up to €20,000, through a microcredit (up to €10,000), supplemented by a loan of honor or public aid for example. The granting of a microcredit is based on several criteria:

·         the project leader: motivation, experience, skills, etc.

·         the project: location, potential, projected turnover, etc.

·         the ability to repay.


Participatory financing

Participatory financing or crowdfunding is a financing mechanism that allows to collect funds from a large public in order to finance a creative or entrepreneurial project, which works most often via the Internet. This financing can take 3 forms:

A loan

·         the subscription of capital or debt securities issued by the supported company

·         a donation or contribution that may be matched.

If you turn to a crowdfunding platform by loan (with or without interest) or by subscription of financial securities, it must have a regulated status:

·         Participative investment advisor (CIP) or investment services provider (PSI) approved by the Autorité de contrôle prudentiel et de résolution (ACPR) for the subscription of securities

·         intermediary in participatory finance (IFP) for loans.

You can identify sites with these statuses thanks to the label "Participatory finance platform regulated by the French authorities".

 Also read: 5 steps to becoming an entrepreneur with all the tools to succeed 💲💲


Incubators are support structures for business creation. By approaching an incubator, you can be accompanied in the realization of your entrepreneurial project for a period of 1 to 3 years. If the incubators are known for their missions of assistance and advice to entrepreneurs, they can also put you in touch with investors willing to participate in the capital of your company.

The nature of incubators is diverse. They can be public or private structures, attached to major schools or local authorities, as well as to large companies.

On the internet, it is possible to find free websites that propose directories of incubators, to which you could apply in order to have your project supported.


Business angels

If your company has strong growth potential, it may be of interest to business angels (or "angel investors" in French). Behind this term are individuals, often former executives or entrepreneurs themselves, who wish to invest part of their financial assets in innovative companies. Thanks to their experience, business angels also provide advice and contacts.

"Business angels, alone or in groups, are likely to finance investments from €50 to €700,000," explains the national federation of France Angels. "In general, they remain a minority shareholder in the company's capital (less than 20%) but actively participate in the life of the company and in decision making," explains Bpifrance Création. "They all have the same objective: to generate substantial capital gains from their investments. They can also benefit from tax reductions, like any individual who invests directly in a company.

Business angels select their projects carefully, focusing on the potential success of the project. The fundraising can therefore be spread over a year. "Ideally and if the conditions are met, the business angel resells his participation within 3 to 5 years," says Bpifrance Création.


Investment funds

Nearly 300 investment funds are grouped together in France within the Association des investisseurs pour la croissance. These are professional shareholders who take a majority or minority equity stake in companies that are generally not listed on the stock market. "They participate in the definition of a clear and long-term strategy for the company, allowing it to create value for its customers, shareholders and employees," says the association.

This private equity activity can intervene in 5 areas:

·         the creation of companies and the financing of new technologies (innovation capital)

·         growing companies with strong development potential (development capital)

·         the acquisition, transmission, or sale of companies (capital-transmission)

·         the purchase of companies in difficulty (turnaround capital)

·         the financing of infrastructure, such as telecommunications or public road facilities (infrastructure fund).

Private equity players inject an average of €5 million per company, and rarely less than €250,000, over the course of a partnership that generally lasts from 3 to 7 years. In 2018, they thus invested nearly €15 billion to finance more companies, 75% of which are SMEs, according to Afic figures.


Intercompany loans

Who better than another company to understand your cash flow needs? Since the law for growth, activity and equal economic opportunities, companies have the possibility to be creditors or debtors of each other. Limited liability companies (SARL) and joint-stock companies can now lend funds to microenterprises, SMEs, or mid-sized companies (ETI). A few conditions apply:

·         the lending companies must only make this loan as an accessory to their main activity

·         loans must not exceed 2 years in duration

·         the loans granted must be in the form of a loan contract

·         the companies must be able to attest to an economic link (direct or indirect subcontractor, same economic interest grouping, same grouping awarded a public contract) justifying the credit.


The competitions

Many associations, foundations, schools or other entrepreneurial organizations offer competitions for creators or new entrepreneurs. They are sometimes aimed at specific audiences (women entrepreneurs, young people, regional competitions...) or defined sectors (digital, ecology, trade, social and solidarity economy...). The prize: financial endowments, but also the opportunity to make oneself known and to meet partners or investors.

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