Meeting a quick cash need through bank financing

Verified 27 November 2024 - Directorate for Legal and Administrative Information (Prime Minister)

To meet a rapid cash flow need, bank financing solutions are available. In order to provide entrepreneurs with better guidance, the Banque de France provides its network of SME correspondents to assist entrepreneurs free of charge. It also offers the services of the Credit Mediation in case of refusal of financing or denunciation of short-term lines.

A company with rapid cash flow needs can turn to a credit institution to obtain an operating or cash credit adapted to his needs.

The funding includes:

  • Cash facility : A credit institution agrees to establish a revolving credit line to meet a temporary financing need. Cash flow allows the company to manage its current expenses (expenses, invoices from suppliers, etc.) in case of a customer payment mismatch, for example. It may be granted only for a specific period.
  • Discovered : A credit institution may enter into an overdraft agreement with the company in which it permits the company to be overdrawn for a specified amount. It is usually signed for 1 year. It is suitable for a one-time but recurring need.

For more information, see the funding benchmark dealing with cash credits Bank of France.

If the operating credit is not sufficient, the company may also use bank borrowing. A company wishing to apply for a loan must prepare a file containing a number of documents presenting its financial situation. On the basis of the dossier presented, the credit institution may make a financing offer to the company or refuse to finance it.

Before embarking, it is important to compare borrowing terms from different credit institutions to find the ones that are best suited to the situation. One is to compare the interest rate, the application fee or the period of reimbursement.

When a company borrows money from a credit institution, it is usually asked to to give guarantees (e.g. surety, pledge, life insurance) . These guarantees, also known as collateralare used to guarantee the repayment of the bank loan. The credit institution protects itself and ensures that if the company does not repay the amount of its loan, it can activate the guarantee.

To learn more about the different guarantee modes, you can consult our dedicated file.

Please note

A credit institution is not required to apply for financing. However, in the case of refusal, he must state the reasons.

In case of disagreement or no reply within 15 working days from the time the file is complete, it is possible to to refer the credit to the Ombudsman.

When a company has difficulties in obtaining bank financing, it can turn to the Banque de France. It has set up a corresponding network of representatives in each department in mainland France and overseas to help entrepreneurs face their financing problems and financial difficulties.

The Banque de France does not itself grant a loan. On the other hand, his expertise, his knowledge and knowledge of the financial system make the Banque de France a privileged interlocutor for questions relating to financing and financial difficulties that the company may encounter.

The TPE/SME correspondent can also direct the company to different players who can help it in its research. Examples include:

  • Chamber of Commerce and Industry (CCI)
  • Chamber of Trades and Crafts (CMA)
  • Professional organizations

Warning  

The Banque de France does not consent no loans.

The Banque de France also provides companies with documentation to help them prepare their cash credit application:

The Banque de France makes the Credit Mediation available to companies.

It intervenes when the company can't find funding or a faces a denunciation of its short-term lines. If a company cannot get an appointment with its credit insurer or banker, it can also refer the matter to the credit ombudsman

The main reasons to enter the Credit Mediation are:

  • Disclosure of overdraft or other line of credit. The company has 60 days from denunciation to bring the matter to mediation
  • Refusal to reschedule debt
  • Refusal of credit or failure to reply within 15 days of submission of a complete file
  • Refusal of surety or guarantee
  • Refusal of guarantee by a credit insurer.

FYI  

Recourse to Credit Mediation is free and confidential.

In order to apply to the company Credit Mediation, you must file a online folder :

File a company credit mediation file

A company that has difficulty completing its mediation file may request assistance from trusted third party. It's about volunteer counselors whose role is to examine the files of the companies and to check that, in their situation, it is appropriate to contact the mediation of appropriations. Their intervention is entirely free of charge.

The Credit Mediation verifies that the application is admissible and contacts the company within 48 hours following receipt of the file. A mediator from the department will then define an action plan with the company.

Banks which have refused to grant a loan to the company shall be informed of the opening of the mediation. They have 5 working days to reconsider their position. If at the end of this period an agreement has not been reached, the Credit Mediation intervenes to identify and resolve the points of blockage in the file.

If the mediation has not been successful, the company may request a review of its case. This request is to be made by email. A second free and confidential mediation is then organized at regional level.

Who shall I contact

For more information, see the website of Credit Mediation.

Who can help me?

The public service accompanying companies

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