Private Credit in France
Private credit in France can be particularly useful where a borrower owns substantial assets or is pursuing a credible transaction but requires capital faster, more flexibly or in a more bespoke form than conventional bank lending can provide. Property acquisitions, refinancing, development, temporary liquidity requirements, business transactions and situations involving existing debt can all create legitimate demand for short-term secured capital.
What changes materially in France is the legal and execution environment. A financing secured against French property does not simply reproduce the mechanics of a UK bridge loan with French documents. The role of the notaire, the form of the security, title and registration requirements, valuation, corporate ownership and the interaction between lender counsel and the borrower’s advisers can all affect how the transaction is structured and how quickly it can complete.
For Sutterson Reed, the financing therefore begins with the complete transaction: the asset, borrower, ownership structure, amount required, existing debt, timetable, intended use of funds and the proposed exit. The objective is not merely to locate capital, but to determine whether the French legal and financial framework can support the proposed facility and what structure gives the lender sufficient comfort to advance it.
When Private Credit Becomes Relevant in France
The underlying need is often straightforward even when the transaction itself is not. A purchaser may need to complete an acquisition before permanent financing is available. An owner may have substantial equity trapped in property but require short-term liquidity elsewhere. A developer may need a temporary facility before refinancing, disposal or completion of works, while an existing borrower may need to replace a maturing loan before a longer-term solution is ready.
In these situations, private credit can be attractive because the lender is often willing to analyse the asset, transaction and repayment route together, rather than applying only standardised banking criteria. That does not remove the need for underwriting. On the contrary, the lender will still need to understand the borrower, the ownership chain, the quality and marketability of the security, existing encumbrances, legal title and the realistic route to repayment.
A French borrower sometimes approaches short-term finance expecting the process to resemble a mortgage application. In practice, private credit is closer to a structured transaction. The faster timetable is achieved because the financing can be tailored around the deal, not because due diligence disappears.
“Private credit in France is not simply faster bank lending. It is a secured transaction in which the asset, legal structure, valuation and repayment strategy must all work together.”
The Security Package Is Central to the Transaction
French law provides several mechanisms through which a creditor can obtain security over assets, and the appropriate structure depends on the transaction. The Civil Code defines a sûreté réelle as the allocation of an asset or group of assets to give a creditor preferential or exclusive payment rights.
For real estate, an hypothèque remains one of the familiar security mechanisms. French law permits a mortgage to secure one or more present or future claims, provided future claims are determinable. The exact form, ranking and registration of security need to be handled through the appropriate legal and notarial process, particularly where existing lenders are already registered against the property.
France also recognises fiducie-sûreté, which can be significantly different in character from an ordinary mortgage. Under the Civil Code, ownership of property can be transferred into a fiduciary arrangement to secure an obligation; the Code expressly provides for both movable rights and, separately, real estate to be transferred as security through a fiducie.
That does not mean a fiducie should be used automatically. It is a specialist security structure whose suitability depends on the borrower, lender, asset and wider transaction. The commercial point for a borrower is simpler: French private credit can involve several different forms of lender protection, and the structure selected can materially affect cost, documentation and execution.
Why the Notaire and Legal Counsel Matter
French secured transactions involve a more formal legal environment than many borrowers expect. Real-estate security often requires notarial involvement, while the lender will generally want its own legal counsel to review the transaction and ensure that the intended security can actually be created and perfected.
This legal work can include reviewing title, ownership entities, existing mortgages or charges, easements, leases, planning matters, corporate authority, shareholder arrangements and other issues affecting the lender’s position. Where the borrowing entity is a company, the relevant corporate approvals and authority to grant security also need to be valid. French law expressly recognises that a private legal entity can grant real security over its assets pursuant to powers arising from internal resolutions or delegations even where the security itself ultimately requires an authentic deed.
For the borrower, this is why a seemingly simple request for capital can generate several parallel workstreams. The lender is not only deciding whether the property is valuable enough; its advisers are making sure that, if the facility completes, the legal protections expected by the lender actually exist and can be enforced.
Valuation Is Not Optional Decoration
A lender advancing capital against French real estate generally needs an independent view of the underlying value. The borrower’s purchase price, estate-agent appraisal or personal opinion is not enough to establish the lender’s security position.
The valuation can examine current market value, property condition, location, marketability and, depending on the transaction, the impact of development or planning assumptions. The lender uses that information to assess the amount it is prepared to advance and the equity cushion remaining beneath its exposure.
This is where borrowers sometimes become frustrated by upfront valuation costs. The valuer is being instructed to produce professional evidence for the financing decision, and that work has a cost regardless of whether the final loan eventually completes. The same principle applies to legal professionals and notarial work: third parties who are instructed to investigate, report or prepare transaction documents are providing substantive work before capital can safely be released.
The correct approach is therefore not to assume that every pre-completion cost is suspicious. It is to understand who is being paid, what work is being commissioned, whether the fee is refundable or non-refundable, and what written terms govern it.
Commitment Fees and Other Upfront Costs
This is an area where international borrowers, and French borrowers in particular, can be understandably cautious. Many have previously encountered poorly explained fees or have heard stories of transactions where money was paid and financing never completed.
That concern is legitimate, but it should not lead to the conclusion that every commitment or due-diligence cost is improper.
In private credit, a lender or financing structure may require certain costs or commitments before significant third-party work is instructed or capital is reserved. The exact mechanism varies by transaction. Some costs are payable directly to valuers or legal professionals; others may be governed by the lender’s formal terms or an undertaking. What matters is that the documentation clearly explains what the payment relates to, who receives it, whether it is credited against another fee, and what happens if the transaction does not proceed.
Sutterson Reed should never present a universal fee rule because there is no universal fee rule. The role of the Private Office is to make the commercial process intelligible before the client commits to it, so they know the difference between a genuine transaction cost and an unexplained payment request.
Réméré Is Not the Same Thing as a Loan
France also has a legal mechanism known as vente à réméré, or sale with a right of repurchase. This is fundamentally different from a conventional secured loan. Instead of merely granting security over the property, the arrangement involves a sale combined with a contractual right for the seller to repurchase under the agreed conditions.
Because the economic consequences can be substantial, réméré should not be casually described as another form of bridging finance. It can be relevant in specific circumstances, but it changes ownership and therefore requires careful legal and tax analysis before it is considered.
This distinction matters because the French market contains several mechanisms that can appear to solve the same liquidity problem while producing very different legal outcomes. A borrower who simply says “I need money against my property” may therefore have several potential structures available, but they are not interchangeable.
The correct financing route needs to balance liquidity, ownership, security, cost and exit, rather than focusing solely on how quickly cash can be obtained.
The Exit Strategy Remains Fundamental
Private credit is usually short-term capital, which means the lender wants to understand how it will be repaid from the outset. A borrower might intend to sell the secured property, refinance with longer-term bank debt, complete a development, receive proceeds from another transaction or repay from another identifiable liquidity event.
That exit needs to be credible within the facility term.
A proposed sale should reflect the likely marketability and realistic sale period of the property. A refinance exit depends on whether the borrower and asset are likely to qualify for the intended longer-term financing once the relevant conditions have been met. Where repayment depends on another transaction, the lender may want to understand how advanced that transaction really is.
This is why the best private-credit transactions are structured backwards from repayment. The facility amount, term, interest burden, security and execution plan should all be considered against the point at which the borrower expects to redeem the debt.
Cross-Border Ownership Adds Another Layer
French property is frequently held by individuals or companies whose wider affairs extend beyond France. A UK entrepreneur might own a French property through an SCI or another corporate vehicle; a Swiss resident may own French assets while maintaining companies elsewhere; an international family may have ownership and banking relationships across several jurisdictions.
Those circumstances do not prevent financing, but they can introduce additional due diligence. The lender needs to understand beneficial ownership, source of funds, corporate authority and how the French borrower relates to entities or individuals abroad.
The banking side can also become more international. A French property-backed facility may be denominated or serviced in a way that interacts with accounts elsewhere, while the borrower may ultimately refinance or repay using proceeds from another jurisdiction. The transaction therefore needs to be structured as French secured lending within an international financial picture, rather than pretending the rest of the client’s affairs do not exist.
Why Sutterson Reed?
Sutterson Reed approaches French private credit as a complete financing mandate. We begin with the transaction itself: the borrower, property, ownership, existing debt, required capital, timing and proposed exit. From there, the appropriate financing structure can be assessed alongside valuation, legal and notarial requirements and the form of security appropriate to the case.
For some transactions, the structure may revolve around conventional real-estate security. Others may require more specialised arrangements. What matters is not selecting the most exotic mechanism, but identifying the structure that gives the lender appropriate protection while allowing the client to accomplish the underlying commercial objective.
The Private Office then coordinates the moving parts so that the client is not attempting to manage the lender, valuer, lawyers, notaire, banking and transaction timetable as disconnected processes.
Discuss Your French Private Credit Requirements
Whether you are acquiring property, refinancing existing debt, releasing liquidity, financing a development or solving a time-sensitive funding requirement in France, Sutterson Reed can assess the transaction and structure the financing around the underlying asset and objective.
