Do you need a Swedish licence to lend to a Swedish company?

Article 21c is only part of that answer. So we have written a memorandum that deals with the whole of it. It covers the Swedish licensing test as it has stood for twenty years, where each kind of foreign lender lands under it, what changes in January, and the questions that follow once the loan is on the table. What happens if you get it wrong? Is the loan still valid? Is there withholding tax? This article gives the short version. The full memorandum is available on request, by message on LinkedIn or by email.

Start with three questions

First, where is the lending actually carried on? A lender that has set itself up in Sweden is in a different position from one that lends from home.

Second, is the lender a credit institution where it sits? If it is an EEA bank, it operates in Sweden on a notification from its home regulator and never needs a Swedish licence. If it is a bank from outside the EEA, it needs SFSA authorisation for a branch (Sw. filial) once its Swedish activity amounts to establishment, and from 11 January 2027 it can lend in Sweden only through such a branch or an EU subsidiary, unless one of the exemptions fits.

Third, and only if the lender is not a credit institution at all, does it carry on “financing business” in the Swedish sense? That means both taking repayable funds from the public and granting credit, and doing it through an establishment here. At this point it stops mattering where the lender is incorporated. An EEA seat gives no passport. A New York lender with no licence at home can still be caught in Sweden.

Most non-bank lenders get to the third question and stop there, with no Swedish authorisation required.

Sweden does not license lending as such

This surprises lenders used to Germany or France, where granting credit is a licensable activity in itself. Swedish law has never gone that way. What the Banking and Financing Business Act (Sw. lag (2004:297) om bank- och finansieringsrörelse) regulates is “financing business”, and financing business has two limbs that must both be present. The business takes repayable funds from the public, and it grants credit. Take away the first limb and the second does not matter. A lender funded by its shareholders, by a bank line or by a handful of institutional investors can make as many Swedish loans as it likes without carrying on financing business.

So most of the work is done by the first limb, and a few things about it are not obvious.

“Repayable funds” is a substance test. Deposits, loans and bonds all qualify if the recipient has to pay the money back. Equity and other risk capital do not.

“The public” is not a headcount. What matters is whether the offer goes out to an open or broadly defined group, not how many investors end up participating. Money from banks, insurers, investment firms and other financial institutions is not money from the public. Listed bonds, on the other hand, are treated by the SFSA as offered to the public for the simple reason that they are freely transferable, and it makes no difference that nobody trades them.

The SFSA looks at each legal entity on its own. But if one group company raises the funds and another does the lending, and the split looks like a way around the Act, the SFSA may look through it.

There is also a volume element. Financing business has to be carried on as a business, and the general view is that one or two loans are not enough. The Act does not say so and the point has not been tested. The statutory exemptions (vendor finance, intra-group lending where the group is not principally a financial one, and the occasional purchase of receivables) rarely need to be invoked, because most lenders already fail the first limb. They matter to a group finance company with a public bond programme, and not to many others.

Where each kind of lender lands

Note what the table does not say. There is no number of Swedish loans at which an EEA bank starts needing a Swedish licence. Chapter 4 of the Banking Act has no threshold, and volume cannot turn a notification into an authorisation. And for a lender that is not a bank, the place of incorporation has no bearing on the outcome. A Luxembourg credit fund and a New York credit fund are analysed in exactly the same way. EU funds that originate loans under AIFMD II do so under the AIFM passport and are outside the Banking Act altogether.

When does cross-border lending become establishment?

Nobody has drawn that line, not the directive and not the Swedish legislator, and there is no number of Swedish loans at which you cross it. For a third-country bank the question is nonetheless the whole game. Once its Swedish activity has the permanence and substance of an establishment, it can no longer be described as lending from abroad, and it has to go through an authorised branch. Not registering a branch does not help. The requirement follows from what the bank does, not from what it files.

What does establishment look like in practice? Picture a syndicated facility. The arrangers came to the lender, the documents are under English law, they were negotiated and signed in London, and the money goes out from London. Nothing there points to Sweden. Now picture a lender that markets to Swedish companies, sends people to Stockholm to originate deals, and keeps someone here who can commit it. That points the other way.

EEA banks face a related but different question. Are they providing services in Sweden, so that a passport notification under Article 39 CRD is needed? Volume is not the test there either. One loan can be enough if it was marketed and negotiated on the ground. Ten passive participations in foreign-law syndicates may not be. In practice the question seldom bites, because the notification is a one-off filing by the bank to its own regulator and most banks with any Nordic business already have one for Sweden.

What CRD VI adds, and the questions it leaves open

We covered the mechanics of Article 21c, the branch requirements and the SFSA process in the July article and will not repeat them. The short version is that from 11 January 2027 an undertaking from outside the EEA that would be a credit institution (or a large investment firm) if it sat in the EU may provide lending, guarantees and commitments in Sweden only through a branch authorised by the SFSA or through an EU subsidiary. The branch can serve Sweden only. The exemptions are reverse solicitation on the client’s own exclusive initiative, services to banks and large investment firms, intra-group services and core banking services that go with MiFID investment services. None of them is generous.

The questions we are now being asked are about timing.

Contracts signed before 11 July 2026 are grandfathered. They sit outside Article 21c and can be performed after 11 January 2027 with no branch. Contracts signed on or after 11 July 2026 are not caught today, but must comply by 11 January 2027. A new facility, or an incremental commitment signed this week, is in that second group.

Which later events cost a contract its grandfathering? The directive is silent. The LMA’s view, which we share, is that a utilisation or a permitted reduction of commitments does not, while a new syndicate member, an increase in commitments or an economically material amendment may.

Then there is accession. Suppose a third-country bank joins an existing, grandfathered facility after 11 July 2026, by transfer or by taking up an incremental commitment. Is it protected by the facility’s grandfathering? In our view it should not assume so. On the date it accedes, it provides core banking services for the first time. It may still accede before 11 January 2027, but it then holds an exposure that has to be brought into line by that date, whether by exiting, by transferring to an EU-authorised group entity or by taking a funded sub-participation so that the existing lender stays lender of record.

All of which has consequences for the documents. Where Article 21c is in play, the facility agreement should let commitments move to an EU-authorised group entity or branch without the borrower or the agent being able to hold things up. Where there are EU and non-EU obligors, it should allow the exposures to be separated. And where the lender relies on reverse solicitation, it should say, in terms, that the borrower came to the lender on its own exclusive initiative.

And if it goes wrong?

It depends on what was missed. A passport notification that should have been made and was not is a supervisory matter between the home regulator, the SFSA and the bank. Lending that needed a Swedish authorisation is a different order of problem. The lender is carrying on regulated business here without a licence and the SFSA can intervene, order it to stop and impose sanctions. What the Banking Act does not do is invalidate the loan. Neither the loan nor the security becomes unenforceable because the lender lacked a notification or a licence, at least not as a matter of Swedish licensing law. We would still look at it again in any actual enforcement.

Three shorter points. Sweden has no withholding tax on arm’s-length interest, provided the payment really is interest and not a disguised distribution. For an EEA bank the main consequence of a Swedish branch is usually tax rather than regulation, since the branch will normally be a permanent establishment (Sw. fast driftställe). And none of the above applies to consumer credit, which since 1 July 2025 can be granted or intermediated in Sweden only under a Banking Act authorisation.

The memorandum

The full memorandum is thirteen pages and rather comprehensive. It gives the statutory basis, the preparatory works and the SFSA statements behind each point above, and goes further on grandfathering, accessions and what a third-country branch actually has to satisfy. We wrote it for lenders, arrangers and their counsel who need to take a position on a live transaction rather than read about the subject. If you would like a copy, message us on LinkedIn or write to info@refisthlm.se.

This article provides information of a general nature and does not constitute legal advice.