The Lending and Secured Finance Review

The Lending and Secured Finance Review

The volume of credit in Belgium has risen over the past few years. Despite the increased attention given to alternative finance methods, banks remain the main suppliers of credit in Belgium. The National Bank of Belgium (NBB) reported that the outstanding amount of used credit granted to non-financial institutions was, in March 2020, more than €154 billion. The NBB also noted that credits granted to non-financial institutions have been increasing since 2018 even though they have been reducing their capital (and so becoming less solvent). This trend of a strong flow of bank loans to non-financial corporations continued in 2019, although its growth started to stabilise. A new high increase in the amount of credit granted was reported in March 2020 and it is likely that more increases are to be expected in the months thereafter, which can obviously be explained by the ongoing covid-19 crisis.

Overall, financing conditions have remained highly accommodating over the past years, although lending criteria to companies were tightened due to increased risk perception by the banks. According to a European Central Bank (ECB) survey published in May 2020, Belgian small and medium-sized enterprises (SMEs) can easily find access to credit. However, SMEs throughout the entire euro area have growing concerns about financial conditions and macroeconomic factors affecting their future access to external finance. In particular, the availability of credit lines and bank overdrafts is expected to decrease. During the covid-19 pandemic, SMEs have often encountered liquidity problems. Credit lines and bank overdrafts are the typical type of short-term instruments that SMEs can use to face such challenges.

At the beginning of 2019, Belgian company law was reformed with the introduction of the new Belgian code on companies and associations (the BCCA) of 23 March 2019. The BCCA entered into force on 1 May 2019 and has gradually been applying as from that date. The reform is generally having a positive impact on Belgian transactional financing practice.

In Belgium, banks often use either their own templates to document loans or, depending upon the loan size and deal structure, Loan Market Association (LMA)-style documents may be entered into.

You can read the full article that was published in The Lending and Secured Finance Review here.


Audrey Zegers


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