An honour 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 honour 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 honour loan?
  
• Why request an honour loan?
  
• Who benefits from an honour loan?
  
• The amount of an honour loan
  
• Requesting an honour loan
  
• Repaying an honour loan
  
• How Stripe Capital can help
  

What is an honour loan?

Honour loans are no-interest financing for businesses to fund the creation, acquisition or growth of a company. An honour 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.

Honour 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 honour loans in 2024 for a total of approximately €103 million.

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

Who can award honour loans?

In France, a variety of entities award honour loans, such as associations, professional networks, local authorities or specialised 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 maximise their chances of obtaining a loan, entrepreneurs should determine which entity is the best match for their project and profile. Those who award honour 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 honour loans?

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

• Solidaire honour 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 honour 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 honour loan
  Several lenders – such as the Wom'energy du Réseau Entreprendre – offer no-interest honour loans to encourage women entrepreneurs to create or acquire businesses.
  

Why request an honour loan?

Honour loans offer several advantages to the entrepreneurs that obtain them. An honour 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, honour 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 honour – 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 honour 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 honour loan works as a significant multiplier. For each euro of honour 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 honour loan can be combined with other honour 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 honour loan?

All entrepreneurs are eligible for honour 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 honour 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 honour loan

The amount of an honour 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 honour loan amount is €10,000.

Requesting an honour loan

There are several steps to request an honour 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 analyse your business plan together, determine the appropriate loan amount, create your financing plan, discuss potential challenges, and prepare your honour loan application.
  
• Submit your application and all required information to request the honour 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 honour loan contract indicating the timeline, repayment conditions, and agreed-upon amount, which can vary from the amount requested.
  

Repaying an honour loan

The entrepreneur is personally responsible for repaying the honour 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 honour loan after an initial period of time has passed.

How Stripe Capital can help

Stripe Capital offers revenue-based financing solutions to help your business access the funds it needs to grow.

Capital can help you:

• Access growth capital faster: Get approved for a loan or merchant cash advance in minutes – without the lengthy application process and collateral requirements of traditional bank loans.
  
• Align financing with your revenue: Capital's revenue-based structure means you pay a fixed percentage of your daily sales so payments scale with your business' performance. If the amount that you pay through sales doesn't meet the minimum due each payment period, Capital will automatically debit the remaining amount from your bank account at the end of the period.
  
• Expand with confidence: Fund growth initiatives such as marketing campaigns, new hires, inventory expansion and more – without diluting your equity or personal assets.
  
• Use Stripe's expertise: Capital provides custom financing solutions informed by Stripe's deep expertise and payments data.
  

Learn more about how Stripe Capital can fuel your business growth or get started today.