Launching a startup

The first contact between Sparc Industries and the BCEE was in July 2017. At that moment the two founders had the idea of launching a startup, but were uncertain about the actual implementation. Sparc Industries and Yves Wampach, Corporate Adviser at BCEE, guide us through the early stages of starting a business. Interview.

“To meet the specific requirements of young and ambitious entrepreneurs who have the idea of creating their own business, the BCEE has specialists who will support them throughout the entire life cycle“, states Yves Wampach. “Our consulting services are not limited to financing, but also include advice to companies at every stage of the business life cycle“.

Indeed, setting up a new business is a process that requires careful planning. Before launching a company, a business permit is required for any person that wishes to engage in a professional activity as a company. Further permits may be requested depending on the future activities of the business.

A further step is to choose a legal form for your company. Each type of company (SARL and SA are the most common) has specific characteristics with regard to the setup of the business, its partners, management and taxation. All these elements must be taken into account when choosing the most appropriate form for your company.

“My role as a Corporate Adviser at BCEE is to guide you through the administrative procedures for setting up your business and getting your startup off the ground”, says Yves Wampach.

How to qualify for a Business Startup Loan?

In many cases new companies face issues in financing their business. Banks often deny startup loans due to a high risk environment. Therefore the BCEE works together with actors like the SNCI (Société Nationale de Crédit et d’Investissement in Luxembourg), the Mutualité des PME or the Mutualité de Cautionnement to increase the chances of getting a loan. These actors have the facility to grant additional guarantees to the startup and thereby reduce the risk for the bank.

To improve even more the chances of being granted a loan, the BCEE joined the InnovFin programme in 2018 with a budget of 40.000.000 euros. In order to boost innovation, this programme provides a whole range of tools to facilitate access to funding for innovative companies. The InnovFin guarantee is one of these tools and enables the BCEE to support small and medium-sized companies and mid-cap companies in innovative projects by guaranteeing 50% of the financing granted.

What about subsidies?

Sparc Industries receives subsidies from the Ministry of Economy. These subsidies are paid once the company has reached predefined milestones. They received a first prepayment to get the business off the ground, but until achieving the first milestone for the next payment, the company often has no further income. On the other side salaries and costs have to be paid.

In that case the assistance of a bank is crucial. We were pleased to assist Sparc Industries by pre-financing the future subsidies and by putting in place a line of credit. That way operating costs, gaps in cash flow or unforeseen expenditures can be quickly paid and in a flexible way, explains Yves Wampach. “In order to grow, your company needs effective financing solutions at the right moment, therefore it is vital to have a bank which understands your business and knows how to think ahead”.