Funding: practical guides and steps

Funding a business means gathering the money needed to launch and then grow the activity. Personal contribution, bank credit, public support or investors: each source follows its own rules. This page helps founders and SME managers build an application that convinces.

The main sources of funding

A project rarely relies on a single source. Here are the most common ones.

• The founders' personal contribution, which shows their commitment.
• Bank credit, for investments and sometimes working capital.
• Support and guarantees offered by the Regions.
• Private investors, who take shares in the company.
• Crowdfunding, for projects close to their community.

Each source meets a specific need. A long-term loan suits a long-term investment best. An overdraft, by contrast, should only cover short-term gaps. Regional support also varies from one Region to another, so check the conditions early. On the investor side, the tax shelter for SMEs can make your project more attractive.

What the bank really looks at

A credit analyst does not back an idea, but a file. Within minutes, the analyst looks for reassuring signals and warning signs. First comes the realism of turnover. Next comes month-by-month cash flow, especially during the start-up phase.

The personal contribution also matters a lot. The bank shares the risk, but does not carry it alone. A project with 100% debt funding therefore worries lenders. Finally, the director's pay must appear in the figures, otherwise the model looks fragile.

Our seven mistakes that sink a loan application cover each point and its fix. Also prepare answers to the questions a banker will ask.

A solid funding application

The application rests on a few consistent documents. A clear summary opens the presentation. Then come the assumptions, the income statement, monthly cash flow and the financing plan. A cautious scenario completes the set.

These tables must fit together. A loan appears as a resource, then generates repayments and interest. Our guide to the three key tables explains these links. The complete financial forecast guide details the seven-step method.

Timing matters too. A loan often arrives only after the bank's approval, while some expenses fall earlier. Grants sometimes arrive only after the spending they cover. So build a bridge into your cash flow, so that the launch does not stall. Finally, keep your lenders informed: a bank prefers news, good or bad, before payments fall due. Update your figures as soon as an assumption changes. An up-to-date file shows that you truly control your project.

Mistakes to avoid

• Seeking funding without costing the need precisely.
• Paying for a long-term investment with an overdraft.
• Forgetting the working capital requirement.
• Presenting a single, very optimistic scenario.
• Arriving at the meeting without a readable summary.

In Belgium, setting up an SRL also requires a financial plan for the notary. Our guide to the mandatory financial plan sets out its content. For official information on starting a business, see the FPS Economy website.