Almost all the companies in our country are SMEs (small and medium enterprises with between 0 and 249 employees), representing more than 99% of the Spanish business fabric (99.88% according to the latest report by the Ministry of Industry, Energy and Tourism, which represents a figure of 3,110,522 companies).
All these SMEs need loans and credits to develop or start their activity. We see, however, that due to the problems that the financial process has gone through, companies have serious difficulties in finding financing (through loans and loans for SMEs) due to the increasingly stringent requirements established by banks.
These difficulties of granting loans to SMEs by the banks have meant at the same time a worsening of the financial situation at the state level, since one of the economic engines of the country is based on the development of the economic activity carried out by These small and medium businesses. It is not logical therefore, that “the tap is closed” to this type of companies since in a situation like the current one, they are really important to reactivate the economy of the country.
Where does the problem come from?
This situation is mainly due to the lack of liquidity of banks, which despite showing a slight improvement thanks to public aid received by banks in our country – up to 40,000 million euros – have not yet been It has returned to the predisposition of granting loans and loans that were granted before the financial crisis that arose as a result of 2008. There is therefore a long way to go before accessing loans with the conditions they had before this crisis. In this post we tell you both the fundamental differences between loans and loans for SMEs and the general requirements to take into account when approving a loan or loan for SMEs.
What are loans and loans for SMEs?
Often we tend to confuse both concepts, so in this post we want to clarify the concept of each of them and the differences between them.
When we talk about loans for SMEs, we refer to an amount of money that has a limit previously set and that is available to the customer at all times. This means that the customer is not given the total amount fixed, but will be making use of it according to the needs they have, without having to access the total in a mandatory manner. Thus, the entity will make partial deliveries to the client as it requests them. In this way, the client will only pay interest on the amount actually used and not on the entire amount that the entity has granted.
These credits for SMEs are granted for a term, and can be renewed or extended when they are completed.
Loans for SMEs
As for loans for SMEs, they are those financial operations for which banks grant a fixed amount at the beginning of the operation. The condition imposed by the bank for the granting of the loan to SMEs is that the borrower returns the amount together with the agreed interest. This means that the operation has a previously determined life and that the interest is charged from the total loan to SMEs.
Both operations fall within the Spanish private financing, and as we can imagine, have high interest rates. It is for this reason that many companies already access financial alternatives such as Crowdlending.
Loans for SMEs, requirements to get them
Once the main differences of credits and loans are known, what are the requirements?
One of the most important requirements for loans to SMEs is to have a good business plan detailing all the characteristics of their activity and future forecasts. Many of those who request private financing for entrepreneurs usually resort to the realization of a business plan through the famous Canvas model. It is also important to be clear, before applying for financing, if the business activity to be developed can have an outlet and is necessary in the area and markets in which the company is going to move. That is, the viability of the project within the sector.
Purpose of credit for SMEs
One of the requirements for loans to SMEs is to clearly justify what the requested financing will be used for, since if the purpose of the private financing is not clearly specified, it may be that the credit for SMEs falls not be granted.
Another requirement for loans to SMEs that are taken into account to grant a loan is the experience of the manager of the company or the project. Obviously, the companies whose managers have no experience will not be considered equal to the companies whose managers have a lot of experience in the sector of activity of the company in question. Therefore, to apply for SME loans with greater security, we must reconsider the path that is taken in the sector.
Requirements for Loans for SMEs in the Crowdlending
In the case of MytripleA as a Crowdlending platform for companies, the company must verify a minimum of requirements to obtain the loan for SMEs through the platform. These are:
Have positive own funds
This means that the company that requests financing through the MytripleA participatory financing platform must have its own funds (corresponding to the company’s liability), which are constituted through the contributions of partners (social capital) and own profits or losses generated during each year.
To exercise its activity in Spain
MytripleA only finances projects whose activity is carried out in Spanish territory. Once the request for the project that seeks alternative financing has been received, it will be studied by our risk department to know the viability or otherwise of the project to be financed.
Do not present payment incidents
What does this mean? When we talk about payment incidences we may come to mind the credits or loans that are maintained with, for example, certain financial entities. Farther from reality, what MytripleA is studying is whether the project to be financed has met its obligations and keeps up with the payments it has to make, thus greatly reducing the percentage of default for the project’s investors.