Loans for Small and Medium-sized Enterprises

Loans for SMEs are very difficult to obtain, in general the financing for SMEs is quite difficult to access and, getting it or not, is what determines that an SME survives or dies financially suffocated in the attempt. Now it seems that, in the heat of the recent recovery of the Spanish economy, it begins to open a little more the tap of credit, but we have spent about 7 years of enormous drought that has taken hundreds of thousands of SMEs ahead. Bearing in mind that 98% of Spanish companies are SMEs, we can easily imagine what has been the escabechina produced in the Spanish economy in recent years of crisis.

But that is already a thing of the past, now new times are coming and now the banks have their accounts more healthy with the injections of public money and now also, from Europe, the order has been given to allocate funds to finance the business activity, therefore, these are two vectors that pull in the same direction and we are sure that they will produce their effects in the short term in terms of a significant improvement in business financing in Spain.

How to get a loan?

First of all, it is necessary to analyze who is the one requesting the loan, how to make the request correctly and what documents must be presented to give you the definitive “yes”.

If you are a new company, you have to present a well-written business plan, with a good marketing plan, with your market study well done, with a good financial plan in which you can clearly see what are the treasury forecasts and with well planned annual accounts with its three versions: optimistic, realistic and pessimistic. Then you must defend all this before the bank and present it in a solid and credible way, without doubts, with firmness or you will earn a no for an answer.

If you are an SME looking for a loan to finance your current or fixed assets, you must have an unblemished payment history, it must not be included in any RAI or ASNEF default record, you must have positive results in your annual accounts, at least in your last year, must have a seniority in the sufficient activity and demonstrate that it has solvency and repayment capacity. Then the reason for the loan must be clearly specified and if possible supported by a proforma invoice or a budget where you can see how the money obtained from the loan will be invested.

Why do SMEs usually apply for loans?

SMEs usually request loans for entrepreneurship, to finance investment projects in their fixed assets for growth or for expansion and internationalization projects. What usually happens is that at the time of carrying out these projects the SMEs do not usually have all the money necessary to be able to do it and this is why they usually resort to requesting loans from traditional credit institutions, or a platform of Peer-to-peer lending, to be able to finance said projects.

Depending on the guarantees required there are different types of loans. Personal loans usually carry a personal guarantee and are usually more expensive, they are only granted if they are personally endorsed by the administrator or administrators of the company. On the other hand, the loans with mortgage guarantee have as collateral the mortgage of the financed good and therefore have a much cheaper interest rate since, if the loan is not paid, the entity would keep the mortgaged property in order to collect the outstanding debt.

Loans for SMEs through Peer-to-peer lending

There are different reasons for the SME to request some type of loan through Peer-to-peer lending, these are a small sample of them:

Loans for the purchase of motor vehicles or machinery: now Peer-to-peer lending companies have also launched to raise private savings to finance the purchase of vehicles and machinery massively, for this the SME only have to register in a company of Peer-to-peer lending and requesting the desired financing, if the applicant passes the appropriate filters his request will be published and in a very short time he will obtain the necessary resources to formalize a loan with the Peer-to-peer lending company.

Loans for reforms or expansion projects: Now SMEs can apply for a loan for their expansion project or to reform their facilities through Peer-to-peer lending, investors love this type of project because they represent a greater value of the SME and this supposes for them an additional guarantee when it comes to ensuring the return of the investment in case of non-payment.

Loans to finance working capital: If the SME is short of stocks, needs to finance its client portfolio or needs to improve its cash flow, it can always request a loan to finance its currency through Peer-to-peer lending.

Loans for the reunification of debts: If the SME has many small debts that consume too much cash, you can always try to redirect everything by requesting financing for the reunification of debts through Peer-to-peer lending. There are already companies for the reunification of debts, but these usually charge very high commissions and give a bad service since the only thing they seek is to broker, commission and ready.

Advantages of applying for a loan through Peer-to-peer lending

1.- A saving of time and financial costs. Financing by Peer-to-peer lending has the advantage of being cheaper than traditional financing, nowadays bank loans with double-digit interest rates are closing, while by Peer-to-peer lending, if the company is solvent, it can already find financing to a 4% or 5% per year and for companies with low or moderate risk, financing can be found by an average of 7% or 8% per year. Peer-to-peer lending companies do not charge anything for the solvency study, nor for advertising the request of the SME in their Marketplace and do not charge anything for early repayment and, finally, do not force you to hire other financial products to grant financing, such as if they tend to do almost all traditional credit entities.

2.- Greater speed in the processing and in the granting of the loan: The most complicated is the solvency analysis phase of the SME that requests financing, but if it passes without problems, the rest is very simple: the application for financing in the Marketplace and when investors have subscribed 100%, the Peer-to-peer lending company takes care of everything else: to transfer the money to the SME, to sign the loan contract and collect the fees.

3.- Greater flexibility in the amortization period and in the amount of the loan: Both the amount of the loan and the repayment term are fixed by the promoter requesting financing, the Peer-to-peer lending company can advise on what is best for the SME, but it is this, ultimately, who has the final decision on these elements.