Changes to Belgian SME financing law relevant to financing transactions


The amending Law includes the following two changes:

  • Definition of “Company” clarified The SME Financing Law now clearly allows a lender providing financing to a borrower which is part of a corporate group, to test the criteria determining whether the borrower is an SME (and therefore whether the SME Financing Law applies) on a consolidated basis. Prior to the amending Law, this was not clear as the definition of “Company” did not provide for group consolidation of SME's. Interpreted sensu stricto, this implied that the SME criteria test had to be conducted on a non-consolidated basis, which resulted in a higher number of financings potentially falling within the scope of the SME Financing Law. Lenders faced the choice between (i) applying the SME Financing Law sensu stricto, with all its cumbersome consequences, or (ii) evaluating their borrowers on a consolidated basis, and accepting the risk of regulatory intervention were they decided to do so.
  • A new exemption for joint borrowers The SME Financing Law no longer applies to credit agreements entered into by several borrowers if at least one of these borrowers is not considered an SME (i.e. it does not meet the SME criteria), even if the other borrowers are SMEs.

As a result of these amendments, the SME Financing Law will rarely (if ever) apply to financing transactions where a borrower is part of a larger group. Lenders providing financings to group companies in Belgium will surely welcome this red tape reduction.

These amendments apply to credit agreements entered into from 8 January 2018 onwards.