One of the great handicaps that Spanish companies have to support their growth is access to credit. And although we are currently witnessing a gradual improvement in this aspect, challenges still persist related to the increase in costs, the tightening of the conditions for access to financing – terms, guarantees – and the need to adapt to new economic realities. “There are many companies that still face difficulties in accessing credit in their early stages due to the lack of guarantees or solid credit history,” explains Raúl Mínguez, director of the Spanish Chamber Studies Service. Furthermore, “to attract private investors and other types of alternative financing, it is key that SMEs have a clear business plan, with well-founded financial projections and realistic growth objectives. This plan must demonstrate the company’s potential, especially in areas such as innovation and sustainability. However, designing this plan is not within the reach of all SMEs, due to lack of training or difficulties in having resources and advice to support them in the process.
The lack of a solid operating history is one of the biggest obstacles, particularly for startups or new projects, explains Francisco Vidal, director of economics and sectoral policies at Cepyme. «Without prior data to support its viability, How are financial institutions going to evaluate credit risk? and this restricts financing opportunities for these types of companies, despite the growing interest in promoting them. The size of the company is also a determining factor. When a small SME seeks to undertake a large investment or renovation, the financial analyzes carried out by lenders, based on historical income and future projections, can limit the ability to access all the necessary credit. This significantly reduces the viability of larger projects for companies with more modest structures. On the other hand, the activity sector plays a key role in granting financing. “Sectors considered cyclical or sensitive to economic uncertainty face greater difficulties in accessing credit, especially in contexts of instability or risk, affecting their capacity for development and adaptation in critical times.”
Without access to the necessary financial resources, many SMEs would be limited in their ability to invest in innovation, digitalization, sustainability, training, branding, diversification or in their foreign expansion. At this point, explains Jordi Solé Tuyá, executive director of Kreedit, “many SMEs do not know where to go to find options beyond the large banking groups and leaving that framework is complex. The dominant banks in the market firmly maintain their position and do not promote an opening towards other financing alternatives that could be within the reach of SMEs. Adding to this difficulty is the impact of the pandemic, which continues to affect the economic activity of many SMEs. These loans, intended as temporary relief, have not generated an increase in economic activity and today “many of these companies face the pressure of returning loans that, at the time, only managed to cushion the impact of the pandemic, without really contribute to its growth or expansion.
This situation places SMEs in a position of increasing vulnerability. The lack of access to diversified financing sources and the pressure of the commitments made paint a complex picture.
On the other hand, working capital financing becomes essential to guarantee the cash flow necessary to maintain daily operations without interruptions, they maintain from Cepyme. This type of financial support allows companies to continue operating and meet their commitments, even in scenarios where payment and collection deadlines do not coincide and play a fundamental role in the stability and sustainability of the business. Therefore, it is crucial not to forget the two fundamental facets of financing: on the one hand, that related to demand and sales, which ensures operation and daily functioning by supporting working capital; and, on the other hand, that destined for investment and growth, which allows the business to expand and tackle larger projects.
Financing
Currently, around forty alternative private entities operate in the business financing market in Spain that can offer specific services for them, continues Solé. Unlike traditional banks, which typically offer a wide range of products—from loans and credit policies to leasing, renting, financing for imports and exports, and services such as confirming and factoring—these alternative entities are characterized by their single-product approach. . That is, it specializes in a single type of financing, such as sales advances or direct lending. “What happens is that this specialization poses a challenge for companies: they must first be clear about what type of financing they need and find the one that offers the specific product that best suits their particular situation.”
Nearly two million companies needed financing last year
In this sense, Raúl Mínguez points out, the growing interest in diversification has led to greater recourse to private capital, including investments from business angels, private equity funds, participatory financing platforms or mutual guarantee companies. In this way, “the vulnerability caused by excessive dependence on the banking sector with specific guarantees that are difficult to reach for SMEs or fluctuations and changes in the credit policies of the entities themselves” is avoided.
Affected sectors
Given the characteristics of access to financing, the most vulnerable sectors are those that require relatively large investments and with returns occasionally subject to wide margins of uncertainty. In this group there would be some technological branches (with a high component of R&D&i), industrial, energy or construction/real estate, the Chamber of Commerce points out. The importance should also be noted depending on the stage in which the company is, so that startups and companies in early stages that are looking for capital to innovate and grow quickly can be especially affected by the difficulty of accessing said credit. . Or activities subject to high competition, with reduced margins, which increases the perception of risk, such as retail trade or some tourism branches.
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