An honor loan is a financing tool available to French business leaders who want to create, acquire, or grow a business. This no-interest loan provides significant assistance to entrepreneurs. It supplements their personal contributions by providing capital and making it easier to obtain a bank loan to finance projects.

In this article, we examine business honor loans, including the professionals who can benefit from them, their advantages, and the steps to acquire one.

What’s in this article?

• What is an honor loan?
  
• Why request an honor loan?
  
• Who benefits from an honor loan?
  
• The amount of an honor loan
  
• Requesting an honor loan
  
• Repaying an honor loan
  
• How Stripe Capital can help
  

What is an honor loan?

Honor loans are no-interest financing for businesses to fund the creation, acquisition, or growth of a company. An honor loan is a personal loan to an individual instead of a company, and no guarantee or bond is required. The goal of this type of loan is to add to the company’s capital.

Honor loans are popular with French entrepreneurs because they offer a multiuse financing solution that can be adapted to the needs of each project. They can also provide full financing for small projects, instead of using business credit at a bank or as a supplement to a bank loan, which is common. For example, Bpifrance—the public investment bank in France—awarded 20,000 honor loans in 2024 for a total of approximately €103 million.

In addition, with honor loans, entrepreneurs obtain financing for their projects, solid cash flows from the start, and personalized support to help make their companies sustainable.

Who can award honor loans?

In France, a variety of entities award honor loans, such as associations, professional networks, local authorities, or specialized private groups. The two most important entities are the support networks Initiative France and Réseau Entreprendre. Each is unique, involved in specific industries, and has its own eligibility criteria.

To maximize their chances of obtaining a loan, entrepreneurs should determine which entity is the best match for their project and profile. Those who award honor loans include the following:

• Association for the Right to Economic Initiatives (ADIE)
  
• France Active
  
• Bpifrance
  
• Certain regions or French administrative departments (e.g., Pays de la Loire region, Brittany region)
  
• Local financing entities (e.g., Initiactive, Germinal, Hodéfi, Paris Initiative Entreprise [PIE])
  

What are the different types of honor loans?

In addition to the traditional honor loan, there are also honor loans for different types of projects or entrepreneurs’ financing needs:

• Solidaire honor loan
  This is a loan from Bpifrance granted to entrepreneurs who have started or taken over a business within the last three years and are in a specific situation. This includes recipients of return-to-work assistance or professional security benefits, unemployed job seekers who have been registered with France Travail for more than 6 months during the last 18 months, recipients of Active Solidarity Income (RSA) or Specific Solidarity Allowance (ASS), and more.
  
• Innovation honor loan
  This PIE loan is awarded to entrepreneurs who have created a business within the last three years that is headquartered in Paris. In addition, the entrepreneurs must have developed innovative tools, technologies, or digital solutions.
  
• Women entrepreneurs honor loan
  Several lenders—such as the Wom’energy du Réseau Entreprendre—offer no-interest honor loans to encourage women entrepreneurs to create or acquire businesses.
  

Why request an honor loan?

Honor loans offer several advantages to the entrepreneurs that obtain them. An honor loan is a very attractive financing tool for a business because it is a no-interest loan and does not require a guarantee. In addition, honor loans can be used globally rather than for a specific project. Here are some other advantages:

• Easy access: Honor loans are easier to obtain than traditional bank loans that have stricter conditions.
  
• No interest: This loan is interest free, and the entrepreneur only reimburses the amount borrowed.
  
• No collateral: This loan does not require a bond, collateral (e.g., mortgage, pledge, lien), or financial guarantee. The entrepreneur only commits—on their honor—to repay the loan.
  
• Increased business capital: The loan can finance working capital or the business’s startup costs.
  
• Accessible bank loans: The amount of the honor loan is deposited into the entrepreneur’s account—not the business account—which improves the entrepreneur’s loan capacity and facilitates receiving a loan from a banking entity.
  
• Improved bank financing: Combined with a bank loan, an honor loan works as a significant multiplier. For each euro of honor loan credit received, an entrepreneur can receive an additional €7–€13 of bank financing.
  
• Free support: An expert in business creation, acquisition, or growth often provides support to the entrepreneur during the startup phase by helping to prepare applications for obtaining additional financing.
  
• Combination of assistance: An honor loan can be combined with other honor loans or other assistance available—such as assistance with starting or taking over a business (ACRE)—to consolidate a project’s financing and increase chances for success.
  

Who benefits from an honor loan?

All entrepreneurs are eligible for honor loans, independent of their financial profile, age, nationality, or the company’s business structure. This means businesses experiencing challenges, unemployed people, and self-employed professionals can also benefit from an honor loan.

Entrepreneurs can meet conditions of eligibility by demonstrating their project’s economic viability and their financing plan’s strength. However, companies can be excluded from obtaining a no-interest loan, and conditions vary depending on the loaning entity. For example, the following industries do not allow this type of loan to be used: export, agriculture, fishing and aquaculture, real estate development, real estate rental, and financial intermediation.

The amount of an honor loan

The amount of an honor loan can be between €1,000–€90,000, depending on the awarding entity, type of project submitted, and entrepreneur’s needs for capital. For example, for the Initiative France network, the average honor loan amount is €10,000.

Requesting an honor loan

There are several steps to request an honor loan. They range from establishing first contact with the lending entity who processes your request to being awarded the no-interest business loan. In general, here are the steps you should take:

• Have a clear idea of the project you want to develop (i.e., create, acquire, or grow a business), and start the business process (e.g., consolidated business plan, provisional financing available).
  
• Determine the regional entity that corresponds to your profile and project, and make contact.
  
• Meet with the responsible individual, and present your project over several meetings. During these meetings, you will analyze your business plan together, determine the appropriate loan amount, create your financing plan, discuss potential challenges, and prepare your honor loan application.
  
• Submit your application and all required information to request the honor loan. This includes your business plan, provisional financing plan, résumé, cover letter, personal information (e.g., identification, proof of address), and other relevant administrative documents related to the business (e.g., articles of association, Kbis extract).
  
• If your application is chosen, you will present your project to a review committee made up of company executives, bankers, accounting professionals, and other skilled professionals. During this meeting, your goal is to convince the committee of the seriousness of your project, its viability, your experience and motivation, and the credibility of your financing plan.
  
• Wait three to six months for the review committee’s response as it deliberates about the project’s viability and decides whether to approve your application for a no-interest business loan.
  
• Sign the honor loan contract indicating the timeline, repayment conditions, and agreed-upon amount, which can vary from the amount requested.
  

Repaying an honor loan

The entrepreneur is personally responsible for repaying the honor loan per the contract’s conditions. Repayment begins when the project has succeeded or failed and usually takes place within seven years. It includes monthly payments based on the business plan and for the duration of the contract.

According to the loan terms, the entrepreneur might be able to defer repayment by several months or years. This allows the borrower to repay the honor loan after an initial period of time has passed.

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