Starting via Acquisition: Combine as Many Funding Sources as Possible

Dreaming of running your own business, opening a shop, working as a freelancer, or starting your own company? Ever thought of taking over an existing business?

Often, acquiring a business seems more expensive than starting your own, requiring more personal funds as a buyer. However, takeovers of existing companies can offer attractive financial opportunities, making an acquisition financially feasible.

Many starters wonder: How do I finance an acquisition?

An acquisition can be more successful by using different financing sources.

For entrepreneurs active for up to 4 years, there is the PMV Start Loan. Legal entities, full-time and part-time self-employed individuals, as well as unemployed individuals can apply for this loan.

More information and guidance can be found on the UNIZO Start Loan page.

The Start Loan can be combined with other credits:

1. The credit amounts to a maximum of 100,000 euros.
2. This amount is up to 4 times your own contribution. For a loan of €100,000, you need €25,000 of your own contribution.
3. This own contribution can partly consist of loans, for example:
• With a valid Start Loan certificate from RVA, VDAB, or OCMW.
• A Win-win loan from a family member up to the 2nd degree.

In addition to the Start Loan, you can make use of:

1. Win-win loan
2. Microcredit / Impulse Credit
3. Vendor Loan

Win-win loan

With the PMV Win-win Loan, the Flemish government encourages individuals to provide a subordinated loan to small and medium-sized enterprises (SMEs). An individual can lend up to €75,000 to a Flemish SME over 5 to 10 years.

Microcredit - Impulse Credit

A microcredit is for a small loan amount. With Impulse Credit, you can borrow up to 25,000 euros. This credit can be combined with other forms of financing and can also serve as your own contribution for the Start Loan. Read more about Impulse Credit and entrepreneurial stories at https://impulskrediet.be.

Vendor Loan - Seller's Credit

With a vendor loan, the seller defers part of the acquisition payment until all bank credits are repaid. This credit is considered quasi-equity by financiers. Read more about the vendor loan.

Example of financing a €150,000 acquisition through a combination of a Start Loan with other financing sources:

• Acquisition Sum: €150,000
• Start Loan: €100,000
• Own Funds (*): €25,000
• Win-win Loan: €10,000
• Vendor Loan: €15,000

(*) Own contribution can partly consist of specific other loans.

See PMV article

Below is a classic scheme: 30% equity and 70% borrowed capital (bank credit).

Also check out the webinar "How do I finance an acquisition?" (Week of Business Transfer)

Do you have a strong business plan, but insufficient guarantees to convince the bank?

The PMV Guarantee Scheme offers your bank a government guarantee of up to €750,000, covering up to 75% of your credit. You pay a one-time premium that can be spread across the credit.

Note:

Not eligible for acquisition financing by PMV:

• Financing of the acquisition of a minority stake in a share acquisition.
• Financing the acquisition of a shared business fund (complete acquisition).

Also see UNIZO Financial Insight Guidance.

More information and advice? Contact:

guido.seghers@overnamemarkt.be