Evidently, the current situation is creating economic uncertainty. Small businesses, the self-employed, need to know what the work or tax environment will be like in a few months. There are political proposals that include the repeal of the labor reform or the increase of business taxes. The number of unemployed is increasing and I think that in the coming months there will be worrying figures. The investment is stopped.
Why is access to finance still one of the main problems?
The problem is regulation. The European Central Bank is raising the capital needs of the banks and demanding greater solvency, and that the credit rating of the portfolio is higher. If the body increases the solvency requirements, logically there are hundreds of thousands of viable business activities that create jobs in our country without access to credit. This is the reason that the duality is increasing: the big company, the one that has a good rating that obtains the financing that it wants at a historically low price, and the smallest one with the worst rating, that does not obtain the loan directly or obtains it in very unfavorable conditions. Banks want to give loans, but their room for maneuver is much smaller due to the demands of the ECB.
We have the capacity to approve many more operations than we receive. How many companies can be at risk due to lack of loans?
There are 150,000 companies that do not have access to credit, although they have an investment project and are viable. As a result, employment in our country is growing more slowly than the economy will allow. Without investment, there is no employment. We must not forget that in Spain there are more than 1,100,000 companies with less than 10 workers with very serious difficulties in accessing credit.
Banks want to give loans, but their room for maneuver is narrow because of the solvency required. We are going to launch a single product, set for small businesses and self-employed, regardless of the community to which they belong. In addition, the paperwork will be managed in less than one week, the smallest in 72 hours, and will be able to do online. In the digital world, we can not remain analog. We have to adapt to the moment and provide our SMEs with the process; among other things because we would lose young entrepreneurs who only understand “with their bank” through technological means.
What does the SGR offer to the SME?
The national system of guarantees is mutualistic; We are not a bank and we have no profit motive. It is part of the solution to cover those financing demands of small entrepreneurs. We have public funds that help us to have a solvency close to 14% – when the average of the banks is 8% – that make it possible for us to grant very solvent guarantees to those SMEs that do not have guarantees to go to a bank and request financing.
In other countries, there is a greater knowledge and demand for this type of service
SGRs are highly developed in countries with more imperfect financial markets. This makes sense. For example, in Latin America there is a greater demand than in Europe because obtaining credit there is even more difficult. Societies supported directly by the respective governments have been created. In Portugal, the national guarantee system is 10 times larger by size than Spanish, when the economy is 10 times lower. In Germany, Austria and Italy also work quite well, although I think not at the necessary level.
Yes. At the time of the financial and real estate boom, the risk was zero. That is to say; the banks gave unlimited credit to everyone. So, the SGRs were less necessary. The crisis has led to a rethinking of banks’ risk criteria. This does not prevent public administrations, together with private entities or public-private entities, such as the national guarantee system, from working and getting corporate activities to obtain a guarantee.
What interest rates and terms are obtained for the credit
It is certainly cheaper because the bank has no risk. If the SME does not pay we respond. As this is the case, we ask the entities to drastically lower the costs. The real difference is that without guarantees you do not get credit at any price. An SME today can be financed with an interest rate of 6%, and with us, the real rate can be around 4%. In terms of terms, the average operation of the guarantee system in Spain is 80,000 euros to seven years. For many companies what is really important is the term because there are businesses that do not generate the necessary cash-flow in short periods.
What steps must be followed to get a guarantee
It is very simple to apply for a loan- read this post here http://www.tag-shop.net/credit-credit-scoring-and-borrowing/ Tag Shop. In an Internet search engine, you type in the guarantee company and a list of entities spread throughout Spain and with several offices that the client will find within an hour of where they are located will appear.
The cost of a credit through an SGR is reduced to 4% and the terms are wider. And what is the cost of obtaining this guarantee?
The total cost, including the guarantee fee, will be between 4% and 4.5% of the financing amount. There is another contribution you have to make as a partner, because we are mutualists, to contribute to the social capital while your loan lasts; once it is finalized, it can be withdrawn, although most remain for future financing needs and to support other entrepreneurs.
What is the profile of the companies that come to this type of company?
The vast majority are companies with less than five employees, freelancers and young entrepreneurs with good ideas. And at a sectoral level, it highlights services.
What lines are covered?
We cover the entire scope of financial needs of small businesses; from factoring, leasing, export credits … The most usual is for circulation and investment. At the time of the crisis the needs were 70% for circulating and 30% for investment; now we are at 50%. This means that small Spanish companies want to invest, reform their trade, their business, which is the best way to do it for the country as well.
And in terms of internationalization?
There is a special concession with export credits and international guarantees. We are opening lines with Spanish banks that have a presence in certain countries with local guarantee systems. They are bilateral agreements that allow us, with an operation approved in Spain, to obtain an endorsement in Lima, for example.
A public euro placed in the national system of guarantees is 40 euros of credit to the SME. How many applications are accepted and rejected?
We approve about 85% of requests. The first thing we look at is whether the activity is viable, and then the guarantees. In the first half of this year, we made 561 million in 8,741 operations, 16% more than in 2015.
Our problem is now in demand. We have the capacity to approve more operations.
Is the financial culture of small entrepreneurs adequate?
One of the main problems that these business activities have is the lack of financial culture, orderly accounting, a stable and long-term financial structure … This sometimes hinders access to financing. We give advice and training. We are entrepreneurs and better than anyone we can understand this. This type of things causes us to have very little delinquency.
Less than half of the banks in the same customer segment. That’s why we have resources from public administrations. We are very efficient when allocating public money. With a public euro placed in the national guarantee system, 40 euros of credit are generated to the SME.
With what banks and institutions do you have agreements?
We can not harm the most dynamic part of the economy that is SMEs With all banks. In total, we have 800 protective partners, where there are business organizations, city councils, councils and chambers of commerce, among others.
Yes. We are open to any kind of viable business. We have specific lines for young entrepreneurs so that in less than two weeks you can start your project. They are operations of less than 50,000 euros with the sole guarantee of the entrepreneur.
Should small businesses gain size
It’s fundamental; But the bigger the companies, the more demands they have. There are things that we must replant as a country. That companies grow is the best guarantee of creating employment, and sometimes we think that if they are bigger they must pay more taxes.
What should the new government do to support SMEs
Give certainty to the economy. Also, I would like to hear more voices. Civil society must reveal itself against facts and attitudes that hinder growth and prevent Spain from being a socially just country. A 20% unemployment rate is unsustainable and unfair in social terms. We can not harm the most dynamic part of the economy that is SMEs.