Loan on trust
Topic of the practice
Good Practice Information
The loan on trust is directly provided to the project owner, not to the company. It enables to consider this funds as equity and not debt and then to achieve a high leverage effect. Moreover, it enables to have more credibility because of the the company leader presents its project in front of a jury composed of experts (bankers, lawyers, etc.) who make the decision to provide the loan.
Then, bankers have the choice to complete with a bank loan, and it's not always the case, but it really increases the reliability of the project.
Evidence of success
This practice is successful because it achieves a high leverage of bank loans, as the national regulation requires to complete the loan on trust with a bank loan. For example, loan on trust structures invested 3 448 108 € (JEREMIE funds) into companies and it enables an amount of associated bank loans of 36 600 975€.
Contact details to obtain further information on the practice
Regional Council of Auvergne
Annex completed on: 09-30-2014