Growth in instalments: What the EU securitisation reform means for scale-ups

Companies that sell in instalments – through instalment purchases, leasing or loans – wait a long time for their money and can easily run into liquidity shortfalls. Securitisation turns these future instalments into liquidity today – usually at a much lower cost than fresh equity. The EU now wants to make securitisation simpler and cheaper. It will only pay off above a certain size, though: a topic for scale-ups.

Securitisation is familiar from the banking world, but companies are increasingly using it too: AUTO1 has been bringing car loans to the capital market since 2024,¹ the lending platform auxmoney raised EUR 950m through two securitisations within a single week in October 2025,² and the Brussels-based leasing provider LIZY securitised its lease receivables for the first time in 2026.³

In the US, this has long been business as usual. Around 7% of all outstanding loans there are securitised, compared with only 1.9% in the EU.⁴ Outstanding securitisations amount to more than EUR 10,000bn in the US and around EUR 1,300bn in Europe.⁵ The solar provider Sunrun, for example, has placed sixteen securitisations since 2015, most recently one of USD 584m in April 2026 – backed by lease and power purchase agreements for 38,706 residential systems.⁶

That Europe lags so far behind is a late consequence of the financial crisis. It was triggered by securitised US subprime mortgages;⁴ European securitisations performed much better. Between mid-2007 and 2013, 18.4% of US credit securitisations defaulted, compared with 0.05% of European securitisations of consumer and SME loans.⁷ Since 2019, the EU has governed securitisation through a dedicated regulation,⁸ which it is now simplifying: on 21 October 2026, the Council and Parliament reached a provisional agreement on a reform.⁹

Securitisation in 60 seconds

A company – the originator – bundles many similar receivables, such as instalments from loans, leases, rental or long-term purchase contracts. It sells this pool to a dedicated special purpose vehicle (SPV) and receives liquidity immediately in return. The SPV finances the purchase through securities that it issues to investors in several tranches.

The payments that customers make on the securitised receivables then flow like a waterfall from top to bottom: the senior tranche is paid first, the junior tranche bears the first losses. The originator must permanently retain at least 5% of the risk itself⁸ – often by holding the lowest tranche, known as the junior tranche.¹⁰

The originator receives liquidity immediately. The investors bear the default risk to differing degrees depending on their tranche – and, through the risk retention, so does the originator itself.

Why securitisation pays off – and from what size

The lever lies in the separation: investors assess the creditworthiness not of the company but of the receivables pool. The senior tranche therefore often receives a good to very good rating and carries a correspondingly low interest rate. The company usually has to put up its own capital for the lowest tranche; investors finance the rest. In its latest transaction, for example, Sunrun placed only the A tranches and retained the BB-rated Class B itself.⁶

What the reform changes

For companies, four points matter most:

• Cheaper senior financing. Banks need significantly less capital for STS senior tranches. The floor falls to 5% for “resilient” and 7% for other STS tranches;¹⁴ previously, 10% applied.¹⁵ This lowers the interest rate on the largest tranche.
• Less red tape for private deals. Private securitisations get a simpler reporting template.¹⁶ This directly benefits warehouses.
• Lighter checks for investors. Their due diligence obligations are streamlined.⁹ This widens the pool of potential buyers.
• More demand from funds. According to AFME, UCITS funds will in future be allowed to invest up to 25% instead of the current 10% in a single securitisation.^14 17

Which startups stand to benefit

For most startups, the reform changes nothing. Software, deep-tech or biotech startups have no pool of predictable receivables – and therefore nothing to securitise.

It becomes interesting when two things come together:

1. The business model generates receivables. Leasing and rental models, long-term purchase and instalment contracts – for cars, e-bikes, solar systems or heat pumps, for example – loans, buy now, pay later or revenue-based financing. Companies growing this way have to pre-finance every customer; equity is the most expensive way to do so.
2. The volume is right. A securitisation of your own usually only pays off from around EUR 100m. It is therefore an instrument for scale-ups; before that, the path leads through a warehouse.

For this group, the reform makes the path cheaper: the senior tranche becomes cheaper and private structures simpler. The biggest capital advantage, however, is only available with the STS label, and that requires five years of default and loss data. Young originators have to fall back on market data for this.¹⁸ True Sale International also warned that new technical standards for granular portfolios could place an additional burden on smaller issuers.¹⁷

LIZY shows what the path can look like. Founded in 2019, the Brussels-based platform leases used cars to SMEs and the self-employed.¹⁹ As early as 2022, it raised EUR 32m in debt alongside EUR 8.5m in equity.²⁰ Its first securitisation, a private transaction, followed in 2026.³ Together with bank loans and shareholder capital, the package totals more than EUR 300m; it is intended to lower financing costs.²¹

Unfortunately, the reform does nothing to reduce the complexity of securitisation. For most growth companies, it therefore remains too burdensome. But anyone growing with lease, rental or instalment contracts should make their data and contracts securitisation-ready early on. At the latest when the portfolio approaches EUR 100m, securitisation becomes the cheapest way to finance growth. The new rules make this path cheaper – they do not make it shorter.

What startups should do now

1. Check the business model

   Does it generate predictable receivables from lease, rental, purchase or loan contracts? If not, the reform is not relevant.

2. Capture data from day one

   Contract data, payment behaviour, defaults and losses per contract. The STS label requires a five-year history; your own data is the best basis for this.

3. Make contracts securitisation-ready

   Receivables must be assignable, contract templates uniform and servicing properly documented.

4. Plan the volume

   Up to around EUR 100m, the path leads through a warehouse with a bank or credit fund. The public securitisation follows once the portfolio is large enough.

Key terms explained

Legislation: what happens next

1. 17 June 2025

   The European Commission presents two proposals: on the Securitisation Regulation²² and on banks’ capital rules.²³

2. 2025 – 2026

   The Council and Parliament adopt their positions and negotiate in trilogue.²⁴

3. 21 October 2026

   Provisional agreement in Strasbourg.^9 24 The package is a building block of the Savings and Investments Union.⁵

4. Next

   The compromise is drafted in legal language; Parliament and Council must formally adopt it.²⁵

5. Then

   Publication in the Official Journal of the EU, after which the reform enters into force.²⁵

6. After that

   The EU supervisory authorities develop technical standards, such as the new reporting templates.²²

7. From 2027

   In practice, the reform is likely to take effect from 2027 at the earliest.⁴

Luxembourg. The Luxembourg Securitisation Law of 2004 covers far more structures and is currently being modernised (Bill No. 8761).²⁶ However, not every Luxembourg securitisation vehicle falls under the EU rules: without tranching of the credit risk, the reform does not apply.⁸

This article is for general information only and does not replace advice on individual cases.