Financing tools by the SNCI (Société nationale de Crédit et d'Investissement)
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Starting up a business, investing in research and development (R&D), purchasing equipment or developing the business activity in Luxembourg are all projects that require substantial funding.
The SNCI (the national credit and investment institution) is a public-law banking establishment specialised in the medium and long term financing of Luxembourg based companies. It grants various types of loans which depend on the size of the business and the project to be financed.
Although the loans granted by the SNCI do not fully cover the financing of a project, they generally cover 25 % of industrial projects and may even cover 75 % of the investments required in the case of start ups (first establishment) of young craftsmen, traders, accommodation and restaurant operators.
Who is concerned
The SNCI offers various types of loans which depend on the size and legal form of the business and the project concerned:
- equipment loans are for the large majority of Luxembourg businesses;
- start up / takeover loans are for small and medium-sized businesses (SMEs) which have been recently incorporated or taken over regardless of their legal form;
- medium and long term loans are for industrial undertakings and service providers with significant impact on the economic development in Luxembourg;
- indirect development loans are aimed at businesses that carry out development, replacement, innovation, creation or takeover projects which have a substantial impact on economic development in Luxembourg;
- direct loans for research, development and innovation (RD&I) are granted to innovative SMEs that have had their business permit for at least 4 years and have a substantial impact on economic development in Luxembourg;
- loans for innovative businesses can be granted to young innovative SMEs that have had a business permit for less than 8 years and have a substantial impact on economic development in Luxembourg;
- equity loans and equity investments are granted to SAs or SARLs that have their main establishment in Luxembourg;
- the financing of foreign investments is aimed at businesses who have had their management office and production site in Luxembourg for at least 5 years and who wish to develop their activities abroad.
How to proceed
Equipment loans
Purpose
Equipment loans are intended to finance assets (professional equipment) and plots of land used for business purposes only.
Parts of buildings for non-professional use, the vehicle fleet and stock of raw materials or finished products are excluded from the financing measure.
The amount of loans cannot exceed EUR 2,500,000. These loans can, depending on the case, cover up to 60 % of the investment and even 75 % in the event of a start up (first establishment) for a young craftsman, trader, accommodation or restaurant operator.
Beneficiaries
Natural and legal persons who operate a business in Luxembourg and own a business permit can benefit from equipment loans.
However, the activities indicated under article 1 in the Grand-Ducal regulation of 9 May 2010 on aid schemes for SMEs do not fall under the scope of equipment loans.
Application
Applications for equipment loans must be submitted to the SNCI through the applicant's usual banking establishment.
Start up loans
Purpose
Start up loans are aimed at cofinancing certain operating expenses, such as:
- the land, buildings or parts of buildings used for business purposes only;
- professional equipment;
- manufacturing, production or sales licences;
- start up expenses such as advertising, survey and research costs;
- stocks, etc.
Beneficiaries
SMEs that have been newly created or taken over, regardless of their legal form, may benefit from a start up / takeover loan provided they have a business permit (known as "autorisation de commerce").
Already established entrepreneurs and activities which are not subject to a ministerial authorisation cannot benefit from start up / takeover loans.
Application
In order to benefit from the loan, applicants must submit a business plan and a financing plan; the latter must include a contribution (equity capital) of 15 % of the eligible amount.
Medium and long term loans
Purpose
Medium and long term loans serve to finance depreciable tangible and intangible assets, as well as land used for business purposes only.
Example
Depreciable tangible assets:
- furniture;
- computer equipment;
- and other equipment for business operation which undergoes irreversible depreciation due to normal wear or obsolescence.
Depreciable intangible assets:
- software;
- patents and licences;
- research and development expenses, etc.
Investment projects for which a medium and long term loan is requested must amount to at least EUR 100,000.
The amount of the loan cannot be less than EUR 25,000 or higher than EUR 10,000,000 unless authorised by the competent Ministers. As a general rule, the intervention rate of the SNCI varies between 25 % and 30 % of the eligible investment costs.
Parts of buildings with a non-professional use, the vehicle fleet and stock of raw materials or finished products are excluded from the financing measure.
Beneficiaries
Businesses in the industrial and services sectors with significant impact on the economic development in Luxembourg can benefit from medium and long term loans, provided they have capital reserves amounting to at least EUR 25,000.
Application
The application must be submitted to the SNCI together with:
- a description of the business that intends to invest;
- a detailed description (including figures) of the planned investment;
- the financing plan;
- a business plan for the next 3 years;
- and the audited annual financial statements for the past 3 financial years of the business.
Indirect development loans
Purpose
Indirect development loans are intended to finance depreciable tangible and intangible assets, as well as land used for business purposes only within the framework of projects concerning:
- the development of the current business activities;
- the purchase and replacement of depreciable tangible and intangible assets;
- the development and communication of products and/or services, of processes or organisational methods that are new or have been substantially improved/modified as compared to the latest technology in the sector concerned and which represent a risk of technical or industrial failure;
- the starting up or transfer of a business.
The amount of the loan can go from EUR 12,500 to EUR 10,000,000 but cannot exceed:
- neither the amount of equity held by the beneficiary;
- nor the cumulated amount of the funds brought by commercial banks to the project.
at least 20 % of investments and expenses shall be co-financed by the business's own resources.
The SNCI's share cannot exceed 40 % of eligible costs, taking into account the overall debt to the SNCI.
Beneficiaries
In order to benefit from indirect development loans, businesses must have a valid business permit.
Application
Applications for indirect development loans should be submitted to the SNCI via an authorised bank (BCEE, BGL, BIL, Banque Raiffeisen, ING, Banque de Luxembourg, BCP).
Direct loan for Research, Development and Innovation (RD&I)
Purpose
The direct loan for Research, Development and Innovation is intended to finance the development and marketing of products and/or services, of processes or organisational methods that are new or have been substantially improved/modified as compared to the latest technology in the sector concerned and which represent a risk of technical or industrial failure.
The innovative character of:
- processes or organisational methods must be of a technological nature except for the measures in favour of the environment, natural habitats, human and work environments;
- products or services should be of a technological, commercial and/or organisational nature.
The amount of the RD&I loan is EUR 250,000 at the most.
At least 35 % of investments and expenses shall be co-financed by the business's own resources.
The SNCI's share cannot exceed 40 % of eligible costs, taking into account the size of the project and of the business.
Beneficiaries
Innovative SMEs may benefit from the direct RD&I loan provided they have had a valid business permit for at least 4 years.
Application
The completed application form (to be requested) must be submitted to the SNCI before the start of the project together with the following documents:
- a presentation of the applicant (date of incorporation, shareholders, activity, main suppliers/clients, team);
- a description of the project (new products and/or services, marketing strategy, project team, market/competition/competitive advantage, project impact);
- financial statements for the past 3 financial years (including liabilities towards the banking institutions and evolution of investments);
- a business plan/budget of the business covering a period of at least 3 years including an income statement and cash flow analysis (operational cash flow, investment and financial flows);
- a financing/disbursement plan for the project in question.
Loan for Innovative businesses
Purpose
The loan for innovative businesses aims to finance the development and marketing of products and/or services, of processes or organisational methods that are new or have been substantially improved/modified as compared to the latest technology in the sector concerned and which represent a risk of technical or industrial failure.
The innovative character of:
- products or services should be of a technological, commercial and/or organisational nature.
- processes should be of a technological nature.
The amount of the loan for innovative businesses is limited to EUR 1,500,000.
At least 35 % of investments and expenses shall be co-financed by the business's own resources.
The SNCI's share cannot exceed 35 % of eligible costs, taking into account the size of the project and of the business.
Beneficiaries
Innovative SMEs may be granted the loan for innovative businesses provided they have been incorporated for less than 8 years.
Application
The completed application form (to be requested) must be submitted to the SNCI together with the following documents:
- a presentation of the applicant (date of incorporation, shareholders, activity);
- a description of the project (new products and/or services, marketing strategy, project team, market/competition/competitive advantage, main suppliers/clients, project impact);
- financial statements for the past 3 financial years (including liabilities towards the banking institutions and evolution of investments);
- a business plan/budget of the business covering a period of at least 3 years including an income statement and cash flow analysis (operational cash flow, investment and financial flows);
- a financing/disbursement plan for the project in question.
Equity loans
Purpose
Equity loans are granted with the aim to promote the creation, development, conversion, reorientation and rationalisation of businesses in the industrial, craft or services sector.
The amount is fixed on a case by case basis by the Board of Directors at the SNCI.
Beneficiaries
Companies in the form of an SA or SARL whose registered office is located in Luxembourg may be granted an equity loan.
Application
The application must be submitted to the SNCI together with:
- a detailed description of the company;
- a detailed description of the project to be financed;
- a projected business plan;
- the audited annual financial statements for the past 3 financial years of the business.
Equity investments
Purpose
As is the case with equity loans, equity investments are granted with the aim to promote the creation, development, conversion, reorientation and rationalisation of industrial and commercial businesses.
The amount is fixed on a case by case basis by the Board of Directors at the SNCI.
When the SNCI takes an interest holding in a company, it will be granted the same rights as the shareholders or partners in the company.
Beneficiaries
The SNCI can make equity investments in SAs or SARLs whose registered office is located in Luxembourg.
Financing of foreign investments
Purpose
The financing of foreign investments may be granted in the form of:
- a medium and long term loan;
- an equity loan;
- an equity investment.
This type of financing is aimed at cofinancing Luxembourg based companies that intend to establish themselves abroad within the framework of their development strategy.
Beneficiaries
Businesses that intend to benefit from this measure must:
- be eligible for an intervention by the SNCI;
- have had their main place of business in Luxembourg for at least 5 years;
- have an annual turnover of less than EUR 250 million.
The Luxembourg based parent company has to hold at least 51 % of the subsidiary's share capital, either directly or indirectly at the time and during the whole period over which the financing is granted. The subsidiary has to be incorporated as a commercial company.
Application
The application must be submitted to the SNCI together with:
- a detailed description including the figures of the project requiring the investment;
- a projected business plan;
- a financing plan;
- and the audited annual financial statements for the past 3 financial years of the business.
Who to contact
-
Ministry of the Economy General Directorate for SME, Craft and Retail
- Address:
-
19-21, boulevard Royal
L-2449
Luxembourg
Luxembourg
L-2937 Luxembourg
- Email address:
- info.pme@eco.etat.lu
- Website:
- https://meco.gouvernement.lu/en.html
Telephone numbers vary according to the departments concerned.
-
National Credit and Investment Institution (SNCI)
- Address:
-
7, rue du Saint Esprit
L-1475
Luxembourg
Luxembourg
B.P. 1207, L-1012
- Phone:
- (+352 ) 46 19 71 1
- Fax:
- (+352) 46 19 71 90
- Email address:
- snci@snci.lu
- Website:
- http://www.snci.lu/
