SMEs and Autonomous Alternative Financing



SMEs and freelancers can obtain alternative financing by avoiding banks . It is true that the growth projection data shown in recent weeks by organizations such as the IMF (1.8% for 2015 and up to 2.0% for 2016) are encouraging for the asphyxiated economy and Spanish business network, but we should not fall into the moral risk that this may imply.

After six years followed by reduced sales volumes, delays and defaults – with an average of up to more than 80 days (both by the private and public sectors) -, forced reductions of workforce and incentives, etc., Spanish companies, Or rather, SMEs and freelancers (I do not include companies such as or banks, which have already started to obtain benefits some time ago), have the opportunity to dream again of growing at rates before 2008.

That SMEs are the bulk, the muscle, of the Spanish economy representing 64.8% of the added value (a much higher number compared to other European countries such as the UK or France) and employing 74.9% of the Spanish labor force. It is a fact that seems to have been taken very seriously so far. Support and measures have been rather scarce, both by the government and the markets themselves.

All voices suggest that the solution is export, which is the time for our small and medium-sized companies to “jump” and address those markets that could increase sales volumes (boost economies of scale), diversify risks and finally turn them into companies of significantly competitive size. In addition, the recent depreciation of the euro puts the icing on this cake, making it more attractive if possible.

Access to finance as one of their biggest problems

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However, SMEs, still with water around their necks, are not receiving sufficient institutional support measures and lack access to the essential pillar of this process: financing. According to the European Central Bank, 17% of Spanish SMEs indicated access to finance as one of their biggest problems, compared to 9% or 7% in Germany or Austria.

The banking system still does not release a pledge. Although the European Central Bank continues to send aid packages to the Spanish banking system at minimum interest, the granting of loans to SMEs and freelancers remains totally insufficient. The banks’ balance sheets are still high-leveraged, which restricts the increase in their financing.

via deposits, which predicts a still slow and gradual evolution of credit. The truth is that they prefer to focus on the risk-free (and quite profitable) business of buying State Bonds.

On the other hand, banking integration in the European Union has not yet taken place, and therefore foreign financing still has a difficult place in our system.

What options do SMEs and freelancers in this country have in order not to miss this opportunity?

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The solution involves alternative financing. Two models glimpse a change of air.

On the one hand, the Spanish economy is dominated by bank financing where, unlike countries such as the United States or the United Kingdom, the issuance of private debt is not a very accessible resource for small and medium enterprises (even for some large ones) . This must change.

Using the right tools to attract investment through this channel is not easy, but the first steps have already been taken with the creation of regulated markets such as the MAB (Alternative Stock Market) and the MARF (Alternative Fixed Income Market). Although the results achieved so far have not been as expected, the great attractiveness and profitability of many Spanish SMEs cannot be doubted. For the near future, the Bill to promote business financing presented by the government promises to accelerate this process.

The second model is defined by the need for market pressure for banks. Competitiveness means increased services, better prices and more flexibility.

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New business models not seen so far in Spain, more common in countries such as the UK and USA, such as crowfunding or private equity companies that offer new financing channels taking advantage of the marketplace (the internet market) as a premium tool . Flexibility, speed, security comparable to that of banks and competitive interest rates are the desirable “menus” offered by young companies such as, which, with still very little competition in the market, has already financed with one million euros to SMEs and Spanish freelancers.

The crisis of 2008 brought more than one lesson. One of the most important was the excessive dependence on Spain in the banking sector. Opening the way to new sources of financing, ending a monopolistic dye market and once and for all giving serious support to medium and small businesses – and consequently a more than necessary push to employment – deserves more than a consideration.

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