Proposition 53K3088

Projet de loi relatif à diverses dispositions concernant le financement des petites et moyennes entreprises.

General information ¶

Submitted by

PS | SP the Di Rupo government

Submission date

Oct. 24, 2013

Official page

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Status

Adopted

Requirement

Simple

Subjects

financing small and medium-sized enterprises

Voting ¶

Voted to adopt

CD&V Vooruit LE PS | SP Open Vld MR

Voted to reject

∉ N-VA LDD

Abstained from voting

Groen Ecolo VB

Party dissidents ¶

• Gerolf Annemans (VB) voted to reject.
• Peter Luykx (CD&V) voted to reject.
• Bernard Clerfayt (MR) abstained from voting.
• Olivier Maingain (MR) abstained from voting.
• Damien Thiéry (MR) abstained from voting.

Contact form ¶

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Discussion ¶

Dec. 5, 2013 | Plenary session (Chamber of representatives)

Full source

Mrs Leen Dierick, the rapporteur, refers to her written report.

The proposal for a regulation on the financing of small and medium-sized enterprises has been under consideration for a long time. It expresses a willingness to take concrete steps to balance the relations between banks and SMEs.

In order to stimulate economic activity, our companies must be able to have sufficient funding. Currently, one in three companies are denied all or part of their loan applications. Furthermore, credit conditions continue to be tighter, in particular for very small enterprises, the construction sector and business services, whether in terms of costs, required guarantees or information to be provided.

The bill is aimed at stopping some unfair banking practices. It pursues essentially three objectives:

- provide sufficient transparency in the pre-contractual loan offer so that the undertaking can make an informed and informed choice and compare the contractual conditions of the various lenders;

greater competition between banks to make the credit market more efficient;

a better balance in the contractual relationship between the lender and the company.

What does this project essentially mean? First, there is a duty to inform. The lender should look for the type of loan best suited to the needs of the business. It shall also provide the applicant with an appropriate explanatory notice. The lender must also provide the entrepreneur with a summary of his/her credit agreement explaining the main elements, including his/her rights and obligations. Finally, the company has the right to request a draft credit agreement which must be delivered to it free of charge upon simple request.

Another important point is the refusal of credit. Banks must inform undertakings of the essential elements on which the refusal is based or which have influenced the risk assessment, in a transparent and understandable manner. The aim is to end the opacity surrounding the refusal to grant credit.

Third, as regards early repayment, the project frames re-use allowances, limiting them to six months of interest, calculated on the amount refunded and the rate set in the contract for credits less than one million euros, and requires a clear scheme in the code of conduct for the higher amounts. Similarly, compensation may not be accompanied by additional conditions or charges, such as the conclusion of a new credit contract or administrative charges.

The bill also stipulates penalties in case of abusive clauses. Banks will no longer be able to terminate a credit agreement when the entrepreneur complies with its obligations, without providing for compensation, whether a notice period or compensation. Unfair terms are expressly prohibited.

If the lender does not comply with its obligation to seek the type of credit best suited to the needs of the undertaking, the judge may order the conversion, free of charge, of the credit into another more suitable form.

In conclusion, Mrs. Minister, the adoption of this bill is expected by one of the most important sectors of our economy: SMEs. Should we remember that 99% of Belgian companies are in this category? Like you, we hope that many cases can find a favorable outcome through this bill.

Mr. Speaker, Mrs. Minister, dear colleagues, the present bill aims to establish a scheme for the re-investment compensation or the funding loss to lenders in the early repayment of loans or loans entered by companies. The re-investment compensation, more specifically the compensation for funding loss, is an old very that affects a lot of companies. I have already asked you a number of questions in this regard in the committee and I know that you acknowledge and acknowledge that problem.

For consumers and individuals there is already a scheme, in particular the forms of mortgage credit, in which the re-investment fee is fixed at three-month interest rate. If a different clause is provided, this clause is void.

It is the normal course of affairs that if an undertaking has taken a loan, it must be able to repay it in advance, for example because of the sale of the undertaking or of a part of it, or after an acquisition, debt, capital or interest restructuring. The early repayment of a loan by a company may take the form of good management or a necessity.

Banks are also interested in a tight payment culture. The rearrangement of the lending is an improvement of the competitive position as well as of the competitiveness and thus gives oxygen to our companies.

The banks demand compensation for the lost income, the so-called funding loss. Great, however, is the surprise of the companies when they are faced with the compensation associated with it. That’s where the shoe runs. The calculation of the re-investment fee in the contracts is an irrevocable curve; it is not transparent, difficult to calculate and differs from bank to bank. The impenetrable formulation of the clauses and the calculation methods may lead to dramas. Furthermore, these are high amounts; 70 % of respondents believe they must pay a surplus of 30 to 40 % of the early repayment of capital.

N-VA wants a similar treatment of regulated and unregulated credits, thus of loans and loans. We want a similar treatment between private and professional borrowers. We can absolutely find ourselves in the principle that there must be a arrangement for the reinvestment.

The current draft legislation includes as major guidelines an information and motivation obligation of the lender to the undertaking regarding whether or not to grant a credit and the arrangement of the re-investment compensation in the event of an early repayment. The conditions are more specifically the following. It is about amounts of less than 1 million euros. The scheme only applies to SMEs, i.e. companies with less than 50 employees and with a turnover of less than EUR 7.3 million or a balance sheet total of less than EUR 3.6 million. In addition, a re-investment reimbursement is provided for six months.

N-VA has submitted its own proposal with the following characteristics: the possibility of reallocating a loan in a simple and transparent manner; three-month reinvestment instead of six months; no limit on the amounts of the loans granted, applicable to all companies.

Is that realistic now? I make a comparison: three months of reinvesting is analogous to the private market on mortgage. Has that had an impact on the market? No to. There were no major market distortions in the introduction of mortgages and the market adapted in the shortest time possible.

We do not want a limit of 1 million, because from your explanation in the committee we learned that 80% of the loans and loans are less than 1 million. We therefore call for the extension of the measure to the remaining 20%.

With regard to the restriction of small and medium-sized enterprises, you also have a special reasoning. According to you, 99% of companies are covered by the proposed legislation. So why do you want to make an exception for 1%?

For the open arrangements, we refer to the circular of Febelfin, which can therefore be best applied.

We therefore believe that our proposal is more transparent, simpler and more business-friendly.

Mr. Speaker, Mrs. Minister, colleagues, the financial crisis affects our SMEs very hard. The provision of loans by banks to our SMEs is therefore very difficult.

According to the National Bank of Belgium, lending to small and medium-sized enterprises is still much lower than before the financial crisis. The present draft law strengthens the framework in which SMEs can obtain loans from banks. Instruments will be provided to strengthen trust and transparency between creditors and SMEs. The draft law will contribute to better lending to our companies.

It will also lead to greater transparency in lending to SMEs. For example, there is an information obligation, the obligation of the appropriate credit, a accountability in case of a credit refusal and the development of a code of conduct. All these measures will contribute to a more transparent relationship between the lender and SMEs. That transparency will in turn lead to greater confidence between SMEs and banks, and thus to greater confidence in the economy.

An essential component for CD&V is the limitation of the re-investment fee. Today, many SMEs face very high costs when they wish to repay an investment loan early. Reinvestment fees thus often keep our entrepreneurs in a wreck. On the one hand, the crisis has forced them to disinvest and to repay their loans early. On the other hand, in case of early repayment, they must pay a high re-investment fee, causing the company even more trouble.

An organization such as Tussenstap vzw has been mediating between affected entrepreneurs and the banks for many years, in many cases with results. Last summer she received an Innesto Award from our chairman. The commitment of the volunteers of Tussenstap is admirable.

Even better, however, is a solution to the problem. Well, the solution is here for us now.

For new loans with an amount of less than 1 million euros, the re-investment fee may amount to a maximum of six months interest. For credits exceeding EUR 1 million, the amount of the fee shall be fixed contractually and in accordance with the Code of Conduct. The reduction of re-investment reimbursement is a very important achievement.

Ladies and gentlemen, I am going around.

CD&V has already made a strong effort at many policy levels in our country, to improve the access to and cost of credit for SMEs. With the present draft law, we are taking another big step forward in improving the lending provision. The bill seeks to create a balanced relationship between the lender and the entrepreneur and creates more transparency to stimulate access to credit.

CD&V therefore fully supports the bill. We would also like to thank the Minister of Finance and the Minister of Medium Status for the work done.

Mr. Speaker, Mr. Speaker, Mr. Speaker, Mr. Speaker, Mr. Speaker, Mr. Speaker, Mr. Speaker, Mr. Speaker, Mr. Speaker, Mr. Speaker, Mr. Speaker, Mr. Speaker, Mr. Speaker, Mr. Speaker, Mr. Speaker, Mr. Speaker. In the committee, colleague Muriel Gerkens followed the discussion and presented our bill. She also submitted a number of amendments.

The text that precedes is, of course, a very important text. It is important that steps are finally taken to end the completely unacceptable practices that have grown in recent years with banks. However, the government is not going far enough. She could have gone a little further to support our ⁇ , and especially the many thousands of SMEs.

The problem of re-investment fees is well known. For the companies facing it, it is often an insurmountable problem. In this regard, there should be no problems. There is already a legal system for re-investment compensation. This is even stated in the Civil Code, in article 1907bis, which was introduced a long time ago in the scheme of interest loans.

Since the 1990s, banks have used a different name for such loans. They no longer call them interest-based loans, but came up with formulas such as “investment credit” and so on. They subsequently argued that those credits do not fall within the scope of Article 1907bis of the Civil Code.

Article 1907bis provides for a maximum period of six months for reimbursement fees. Their numbers have increased considerably, as other speakers have already explained. Today, small enterprises who take such a loan and want to repay it after 4 or 5 years because they want to invest in another building or expand are faced with re-investment fees, which can be up to 30 % or 40 % of the outstanding amount.

These are rejectional practices that we must stop. What does the government do? She says that she absolutely wants to limit the term to 6 months. But, if the loans last longer than 1 year, that is not automatic. We have to negotiate with the banks again. Therefore, it does not apply to everyone. That is regrettable.

Another problem is that the amended law will only apply to new loans. That is to say, the text does not provide a solution to companies that are already faced today with such bank wrapping contracts.

I understand that this is not evidence, but what we ask is that the government would decide to apply the new arrangement to current contracts as well. The new regulation will only help those who sign new contracts, but not those who are already facing it.

Then you get to hear the following arguments, namely that this is not possible or that interest rates could rise sharply. I do not know.

First, the market will play in the banking sector. I don’t know if it would be to the detriment of those who want to borrow if one said that there would be an evolution from six to two months or that there would be a slightly tougher action. The market will play. There will be competition and the banks will try to retain as many customers as possible. I do not think that is an argument.

Secondly, the problem was created by the banks themselves who, as I just said, in the 1990s deliberately refused to use Article 1907bis and bypassed it by giving other names to their loans. So they should not come to complain now, because they themselves caused the problem because they have been bypassing the law for ⁇ twenty years.

Third, we sometimes forget that we are facing a giant banking crisis. The government has invested billions in that banking sector and then we should not ask the banks to also make concessions for ongoing loans and to help SMEs.

That is why we submitted two amendments again, on the one hand, to reduce that six-month period to two months and, on the other hand, to make the arrangement, even if it is six months long, immediately effective, also for current contracts.

I think this can boost entrepreneurship and be a real support for the many SMEs in our country.

Mr. Speaker, Mrs. Minister, I accept this argument at the conclusion of my previous argument, since this bill also deals with SMEs and should provide the beginning of a solution to an urgent and pressing SME problem, in particular the refusal of credit and the high re-investment fees in case of early repayment of credits. My colleagues have already explained it.

Mrs. Minister, at a time when a study by Professor Lambrecht, I remind you again, shows that as much as 15 % of the self-employed live in structural poverty and that there were already more bankruptcies at the end of November in 2013 than in the whole year 2012, we need to invest much more in SMEs.

SMEs are the backbone of the economy, I repeat your words, there is much more to be done. Sometimes I have the impression that you want to take those steps, but that you are deterred, ⁇ by the financial tightness or ⁇ by the political majority in which you have to work.

Mrs. Minister, our group has called this bill a bill of missed opportunity, for example because it has limited itself to bank loans. You will say that this is right because the banking institutions still take over the bulk, the majority, the absolute majority of lending to SMEs.

Indeed, Mrs. Minister, the banks are still the credit institutions that provide the most credit to SMEs. You will agree with me that certain SME sectors today find it really difficult, not to say impossible, to get a bank credit and that they turn in large numbers, and more and more, to all kinds of alternative forms of financing. You have little or no ear for this in your bill. It is sorry. It is a bill of the missed opportunity.

We may find ourselves in your logic regarding the credit refusal and the fact that banking institutions must argue the refusal from now on. An information document will be drawn up. In any case, that information document should enable the entrepreneur to search for the main aspects of the draft credit agreement on his own, and it should also enable him to make an assessment of the aspects that are important in lending to SMEs. At least that is your intention. This is stated in your bill.

I only hope that it will succeed and that the information document will indeed be of such nature that entrepreneurs will be able to estimate on the basis of which important aspects the loan is granted or refused. We cannot really measure at the moment. I hope you hit the ball correctly. In any case, I look forward to a very quick evaluation of that document and, if it does not comply, to a very quick update.

I now come to the re-investment remuneration scheme. Finally, we have come to the point, Mrs. Minister, that there is a regulation concerning the reinvestment compensation. That is in any case positive. Future lenders know what to stick to. Future borrowers also know what to expect. At the same time – I am sorry, I will return to it – I regret some shortcomings in your re-investment reimbursement scheme.

I regret, for example, that there is at least a lack of transparency in the calculations of something. I think it should be better. I also deeply regret that no arrangement has been developed for the existing credits, as the biggest problems currently arise with those existing credits.

I can understand your logic somewhere. You are opposed to a retroactive arrangement. From a certain plea for legal certainty, I can even follow you in part, but the Flemish Interest Group thinks that you as a government should at least take a mediating role on you. The SME world is waiting for a closing scheme for existing loans. You should work hard to reach a global arrangement with the financial sector, including for existing contracts.

You say in your own explanation that there is no need for a separate arrangement for large entrepreneurs. In your response to a proposal from colleague Uyttersprot, you say that the large entrepreneurs do not need a separate arrangement because they are able to negotiate with the banks themselves. It is in your opinion that it is the small enterprises, the SMEs, which make up 99 % of the active economy, that will surely welcome an active intervention of the government with regard to the existing loans.

We consider the initiative for a better, more correct system of re-investment fees for SMEs a positive thing, but SMEs would have been even better served if you had also made strong efforts for a government action on existing credits.

Our group will abstain from voting as a warning. We think it can and should be much better.

First of all, I would like to apologize to my colleague. Geens, who is held in the Senate.

The aim of this project is to re-create a better balance between banks and small and medium-sized enterprises. It is about re-creating confidence but, above all, preventing borrowing rates from being higher than they are today. If we follow the proposals of the N-VA or Ecolo-Groen, with two months – why not a month or fifteen days – of ‘wederbeleggingsvergoeding’, there will be an increase in rates! This is what is happening today with mortgage loans, for which rates are higher than market rates because the three-month term is not profitable.

In French, it is said, “Whoever kisses too much is kissed badly.”

With this project we aim to ⁇ greater transparency and more information on the rights and obligations between SMEs and banks and more information in case of refusal. This is a very important project.

This will really balance things. The banks will have to offer loans...this, no one has spoken about it! It is in the project: banks will have to offer the credit most suited not to their profitability, Mr. Speaker, but to the situation of small and medium-sized enterprises. With a million euros, almost all types of loans are covered, given that the average loan for SMEs is 214 000 euros.

Mr. Speaker, I would like to address this briefly.

First, I find it curious that there is no international benchmark despite the fact that all players operate internationally. This is very strange.

Mrs. Minister, secondly, you say this would mean a market disturbance. However, when the re-investment in the mortgage loan for individuals was limited to three months, this did not lead to market distortion. The market has adjusted in the shortest time.

Of course, this is the classic story, interest rates will rise. I can also refer to the mortgage market where – I would like to use another argument – there is also great competition between the various financial institutions. A bank that puts interest rates too high will feel that.

You are talking about market disruption. If there is a case that disrupts the market, it is the regulation that applies today. After all, it does not allow companies that want to invest and build new buildings or purchase to expand their business to do so, also because they are faced with too high reinvestment fees. That is the market distortion. Therefore, we also propose that this be included in the current contracts. That may hurt a bit, but the government has also given billions and billions to the banks to save them. I think they must now make an effort to help the many SMEs in our country when they want to expand and invest, which creates jobs and benefits our economy.