Glossary · Ecosystem and support · Updated
An honour loan is a personal, interest-free, unsecured loan granted to the founder rather than the company, by French entrepreneurship support networks. It strengthens personal contribution, which in turn unlocks a substantially larger bank loan.
The mechanism rests on an accounting particularity that changes everything. Because the loan is made to the founder personally, they then contribute it to the company as equity or as a shareholder current account. To a bank it therefore counts as personal contribution rather than company debt, which directly improves the ratio being assessed.
That is what produces the leverage. Banks rarely lend without a contribution; with a personal contribution built from an honour loan, they will typically lend one to three times that amount. The honour loan does not just fund itself, it unlocks several times more.
The trade-off is real and worth understanding before signing. It is a personal commitment: if the company fails, the founder still has to repay from their own pocket. Unsecured means no asset is automatically seized, not that the debt disappears.
Example: an honour loan and its leverage
A founder approaches a support network and then their bank to fund the launch.
| Honour loan obtained | €25,000 |
|---|---|
| Interest rate | 0% |
| Security required | none |
| Repayment period | 5 years, with 6 to 12 months' grace |
| Who receives the loan | the founder, personally |
| How it enters the company | as equity or a shareholder current account |
| Observed bank leverage | 1:1 to 1:3 |
| Bank loan obtained | €50,000 |
| Total mobilised | €75,000 |
| Dilution | 0% |
Seventy-five thousand euros raised without giving up a share. That is the best ratio of money raised to ownership given up anywhere in the funding path, provided you accept a personal commitment.
The common mistake
Forgetting that it is personal debt and not a grant. If the company is wound up, the honour loan remains owed by the founder, whatever happens to the business. That is the essential difference from a grant, which is never repayable.
Frequently asked questions
How much can you get from an honour loan?+
Generally €5,000 to €50,000 depending on the network, the region and the project, with higher amounts for innovative projects or two-founder teams, since each founder can be eligible individually.
Does an honour loan dilute the cap table?+
Not at all. It is granted to the founder personally, no shares are created and no organisation joins the cap table. That is what makes it particularly attractive at the very start, before any equity round.
Related terms
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