Société Nationale de Crédit et d'Investissement (SNCI) is a public-law banking institution in

Luxembourg City Luxembourg (; ; ), also known as Luxembourg City ( or ; ; or ), is the capital city of Luxembourg and the Communes of Luxembourg, country's most populous commune. Standing at the confluence of the Alzette and Pétrusse rivers in southern Luxe ...

. According to its website, it is designed to encourage business investments, start-ups, and research initiatives. Founded in 1978, it is wholly owned by the State of Luxembourg.

Financial services

SNCI provides medium and long-term financing for investments made by

Luxembourg Luxembourg, officially the Grand Duchy of Luxembourg, is a landlocked country in Western Europe. It is bordered by Belgium to the west and north, Germany to the east, and France on the south. Its capital and most populous city, Luxembour ...

-based companies, including Luxembourg companies operating abroad, and start-up loans for small and medium-sized enterprises. SNCI also provides loans for financing professional equipment including equipment for safety or

environmental protection Environmental protection, or environment protection, refers to the taking of measures to protecting the natural environment, prevent pollution and maintain ecological balance. Action may be taken by individuals, advocacy groups and governments. ...

. It also offers innovation loans for research-and-development programmes or projects of industrial enterprises and service providers;

foreign investments A foreign direct investment (FDI) is an ownership stake in a company, made by a foreign investor, company, or government from another country. More specifically, it describes a Controlling interest, controlling ownership an asset in one country ...

financing; and equity loans for

limited liability companies A limited liability company (LLC) is the United States-specific form of a private limited company. It is a business structure that can combine the pass-through taxation of a partnership or sole proprietorship with the limited liability of a ...

. On average, SNCI loans cover some 25% of investments in

fixed asset Fixed assets (also known as long-lived assets or property, plant and equipment; PP&E) is a term used in accounting for assets and property that may not easily be converted into cash. They are contrasted with current assets, such as cash, bank ac ...

s for industrial projects while up to 75% of eligible start-up investments can be covered for young craftsmen, traders, hoteliers, or restaurant owners.

Equipment loans

Equipment loans are for

investment Investment is traditionally defined as the "commitment of resources into something expected to gain value over time". If an investment involves money, then it can be defined as a "commitment of money to receive more money later". From a broade ...

s relating to the creation, extension, reorientation, or takeover of Luxembourg SMEs in the skilled-craft, commercial, hotel, or industrial sectors. They are granted by decision of the SNCI Board of Directors, via an authorized bank, for financing

intangible asset An intangible asset is an asset that lacks physical substance. Examples are patents, copyright, exclusive franchises, Goodwill (accounting), goodwill, trademarks, and trade names, reputation, Research and development, R&D, Procedural knowledge, ...

s (patents, licenses, or software), tangible assets (equipment for the production or provision of services), and land, buildings or parts of buildings to be used for professional purposes. The fixed-rate loans, with a duration of 10 years and to be reimbursed quarterly, usually start at €12,500 and may not exceed €2.5 million. They normally cover from 25 to 60% of eligible costs (75% for a first business) depending on the sector.

Start-up loans

Start-up loans, designed to encourage new entrepreneurs to create or acquire SMEs, can cover the financing of

business plan A business plan is a formal written document containing the goals of a business, the methods for attaining those goals, and the time-frame for the achievement of the goals. It also describes the nature of the business, background information on ...

s, land, and buildings to be used for professional activities,

working capital Working capital (WC) is a financial metric which represents operating liquidity available to a business, organisation, or other entity, including governmental entities. Along with fixed assets such as plant and equipment, working capital is consi ...

, equipment, intangibles (licenses, software), and start-up activities (advertising, studies). Support ranges between €5,000 and €250,000 but may not exceed 40% of eligible costs. The duration is decided on a case-by-case basis depending on the nature of the costs.

Reimbursement Reimbursement is the act of compensating someone for an out-of-pocket expense by giving them an amount of money equal to what was spent. Companies, governments and nonprofit organizations may compensate their employees or officers for necessary ...

at quarterly intervals must start within five years but repayments can be made earlier without penalty.

Medium and long-term loans

Medium-term and long-term loans can be granted to industrial enterprises and service providers, with equity of at least €25,000, for financing tangible and intangible assets and for land to be used for professional purposes. Projects to be financed must have a value of at least €100,000. Loans are usually for 25 to 30% of the investment. They start at €25,000 and may not exceed €10 million unless ministerial authorization is received. Interest is at the "SNCI prime rate" at the time the loan contract is signed and is free of commissions and additional charges. The rate is fixed by the SNCI's Board of Directors based on

refinancing Refinancing is the replacement of an existing debt obligation with another debt obligation under a different term and interest rate. The terms and conditions of refinancing may vary widely by country, province, or state, based on several economic ...

costs. Medium-term loans are for five years, and long-term loans are for six to 10 years. They are to be repaid in fixed quarterly payments.

Innovation loans

Innovation loans are designed to assist industrial enterprises and service providers in financing

research and development Research and development (R&D or R+D), known in some countries as OKB, experiment and design, is the set of innovative activities undertaken by corporations or governments in developing new services or products. R&D constitutes the first stage ...

programmes or projects introducing new products, techniques, or services. They usually cover 25% of the eligible costs and have a duration of three to five years. Quarterly repayments must start within a maximum of two years.

Equity loans

Equity loan A home equity loan is a type of loan in which the borrowers use the equity of their home as collateral. The loan amount is determined by the value of the property, and the value of the property is determined by an appraiser from the lending ins ...

s are designed to assist Luxembourg

in promoting the creation, extension, conversion, reorientation, and rationalization of industrial, craft, and commercial enterprises. Amounts are fixed on a case-by-case basis by the SNCI's Board of Directors and require approval by the competent ministers. The duration is normally no more than 10 years but a

forbearance Forbearance, in the context of a mortgage process, is a special agreement between the lender and the borrower to delay a foreclosure. The literal meaning of forbearance is "holding back". This is also referred to as mortgage moratorium. Applic ...

period for repayment of the

capital Capital and its variations may refer to: Common uses * Capital city, a municipality of primary status ** Capital region, a metropolitan region containing the capital ** List of national capitals * Capital letter, an upper-case letter Econom ...

may be accorded. The return is identical to that of the shareholders or partners but with a contractually fixed minimum.

Export credits

Export credits may be granted to Luxembourg-based industrial and skilled-craft enterprises or enterprises in their efforts to export goods or services. The SNCI may take a stake of between 25% and 75% of the eligible value of the operation to be financed. The duration usually ranges from six months to five years and the interest rate is linked to the cost of refinancing.

Recent activities

In 2009, the SNCI Board granted loans amounting to EUR 83.6 million, an increase of 63% over the previous year despite the difficult economic climate. Equipment loans, which were already on the rise in 2008 with the financing of EUR 28.9 million for 108 projects, again rose in 2009 to EUR 32.1 million for 104 projects, most being granted to the skilled-craft sector. Large companies were granted nine loans for a total of EUR 18.7 million, compared to six in 2008 (EUR 6.4 million). For start-ups and takeovers, there were 20 loans amounting to EUR 1.7 million compared to 27 in 2008. Most were for very small companies and led to the creation or support of 110 jobs. As a result of non-recurring transactions, overall results for the year were substantially down in 2008 with a profit of EUR 38.13 million compared to EUR 75.2 million.

Applicable legislation

SNCI's operations are defined in Regulations of the Grand Duchy of Luxembourg, in particular "Crédits d'équipements" (Equipment Loans) and "Prêts à moyen et long terme de la SNCI" (Medium and Long-Term Loans by the SNCI)."Prêts à moyen et long terme de la SNCI. Règlement grand-ducal du 14 décembre 2005 fixant les conditions générales des prêts à moyen et long terme prévus à l'article 5 de la loi modifiée du 5 août 1977 portant création d'une Société Nationale de Crédits et d'Investissements et modifiant la limite des fonds propres requis par l'article 4, alinéa 2, de la loi modifiée du 5 août 1977 portant création d'une Société Nationale de Crédits et d'Investissements"
Retrieved 9 September 2011.

References

External links

SNCI official website
{{DEFAULTSORT:Societe Nationale de Credit et d'Investissement Banks of Luxembourg Banks established in 1978 Economy of Luxembourg Companies based in Luxembourg City Government-owned companies of Luxembourg 1978 establishments in Luxembourg