However, according to the latest GEM data (2009), 62% of budding entrepreneurs still needed external funding. Much of this problem has been solved through the intervention of informal investors (business angels) and venture capital, but another large part continues to come from financial institutions. Let’s see what are the main products that the entrepreneur can find.
Loan. It is usually a long-term contract in which the company grants the entrepreneur a significant amount of money in exchange for another amount equal to capital
Lending is analyzed by the Risk Commission and is the product most paralyzed by the crisis, as the demand for guarantees and guarantees, both personal and real, has increased significantly. Although companies generally do not provide information on the interest rates at which they offer this type of loan, we can say that they range from 4.5% to 7%. It’s important to review interest rate review periods, we’ve seen them at three, six and 12 months. The lowest interest we’ve seen is that of Unicaja at Euribor +2.2%. The average payback period is seven years, with Unicaja again going the furthest at 15 years.
It usually has costs for the appraisal, study, notary and in some cases the register. The commissions they regularly support are opening commissions (about 1% on average), full cancellation (1%) and partial cancellation (1% or 0.25%) and subrogation (0.5% or 1%). We have seen the lowest commissions in Novacaixagalicia at 0.5%.
Subsidized Loans. The ideal product is the ICO line, which is requested by 36.6% of SMEs. It is a subsidized loan, both in terms of interest rate and repayment terms. The problem that applicants for these loans face is the large amount of paperwork they involve, the complexity of the requirements to access them, and the lack of information from the concerted entities.
For 2011, the Direct ICO and the SGR ICO stand out. The first is aimed at SMEs and self-employed people who need capital of no more than 200,000 euros at an interest rate of Euribor +3.5%. For investments, the repayment period is seven years with a grace period of two years, for liquidity financing three years with a grace period of one year. It has an opening commission of 0.5% and is not penalized for early cancellation.
It is aimed at SMEs and freelancers who can participate as partners in an SGR. You can apply for up to 600,000 euros at a variable rate of Euribor + 2.5% plus up to 1% annual guarantee costs and up to 4% mutual social security contribution. It has the same payback terms and commissions as the previous product.
In addition, there is the ICO-Sustainable Investment line, which increases the eligible capital for investment projects in sustainable sectors to up to two million euros. No commissions, with an interest rate of Euribor + 1.15% and a term of up to 20 years.
Participation loan Enisa. For the acquisition of fixed assets and current assets. Up to 50,000 euros. It is called participatory because it participates in the profits of the borrowing company via a variable interest rate starting at a minimum rate of Euribor +2%, but unlike venture capital, it does not infer ownership of the company. The beneficiary company must contribute at least 15% of the loan amount from its own resources.
microcredit. These are small loans given to groups that, due to their characteristics, have difficult access to other types of products. The amounts range between 15,000 and 25,000 euros, but sometimes up to 50,000 euros. The interest rate is typically lower than other types of long-term business loans (about 4%, although this can rise with fixed rates), with long grace periods. The term also tends to be shorter: between five and six years.
on-line banking. Although it’s not a product in itself, since the vast majority of banks already have this option, it’s worth analyzing the different functions they offer, since it will be a fundamental tool in the day-to-day running of your business. It’s important to see if it’s available 24 hours a day and if it’s accessible from anywhere in the world (you never know where you may have to visit your customers…).
In the case of Catalunya Caixa, for example, it allows direct contact with the international back office department and manages money transfers, documentary credits, export transfers, export insurance… And some, like Caja de Canarias, also have a WAP service, mobile access, available.
In other cases, this alternative is designed almost like a virtual office, such as UniVia’s (Electronic Banking by Unicaja) e-invoice service.