SME Credit to Start a Business: Tips

According to the Second Report on the Financing of SMEs in Spain by the Spanish Confederation of Guarantee Societies (SGR-CESGAR), one million small businesses in Spain have serious difficulties in accessing the financing they really need, if 150,000 of these small businesses or SMEs achieved access to credit to start a business, could generate up to 450,000 jobs in the next 3 years.

In addition, 70% of the loans for SMEs to start a business are not granted. And yet the volume of loans that banks offer to large multinationals has a growing trend.

This shows once again that access to credit for SMEs is vital for reviving this economy, and not only to offer credit for those companies that are already active, but also for those new businesses that need an initial amount of money to start their activity. However, when applying for an SME loan to start a business has to have very clear all the factors involved.

What do I have to take into account as an SME to apply for a credit to start a business?

First of all you have to stop to think if really applying for a credit to the bank is the best option to start your business. Keep in mind the following characteristics:

  1. The interest rates of SME loans to start a business: If we apply for a loan with very high interest rates, these can squeeze our business activity to the point of swallowing all the profits that initially, as an SME we can get, if this happens continuously over time can make our new business disappear.
  2. The amount of SME credit to start the business: You must develop a very detailed list in which you can quantify which are all the goods and resources you need to start the activity and based on it calculate the total amount that all that could cost. Remember that if you ask for a loan of 15.000€ and in reality the credit to start your business was enough with 8.000€, the interests that you will be paying for the credit will be much higher because they will be made on 15.000€ and us on the 8.000€ that really you have spent. That is why a business plan will be key when making an estimate of the money you need.
  3. The repayment term of the credit for SMEs to start a business: Whether a credit applied for has a too long term or if it is too short, this can be a great barrier to the growth of your business. Therefore it is important to estimate as approximate as possible how long we can repay the loan to start businesses and put a limit, do not extend too much because the longer term usually higher interest, and if at some point we want to amortize early the banks charge a high commission for it. In the case of MytripleA, this does not happen, as we do not charge for early amortization, either total or partial.

Tips to increase your chances when it comes to receiving a credit for SMEs to start your business

  • Have a good credit history: Having borrowed previously doesn’t have to be a bad sign. In fact, if these credits have been repaid on time, it can be a good sign for someone who decides to finance your idea.
  • A detailed business plan that conveys business efficiency and trust to the person or entity that decides to finance you.
  • To be able to back your debt with a reliable guarantee. This will give greater security to people who lend their money in the case of Crowdlending.
  • Get a contract with a client, this will depend on the type of SME company you are going to set up, but it will always give greater confidence to have the guarantee that someone is going to demand your products or services.

Credit to start a business

In addition to the types of credit mentioned above, there are an infinite number of ways to get a loan to start a business.

Among the existing sources of financing to get a credit to start a business stand out:

Credit to start a business with the Official Credit Institute (ICO):

It is a public “bank” that offers lines of credit, some of which are aimed exclusively at entrepreneurs. This public bank depends on the Ministry of Economy and Competitiveness.

Credit to start a business through the ENISA (Empresa Nacional de Innovación) Participatory Business Creation Loan for Young People:

It is a public company that dedicates its activity to give credit to start a viable and innovative business.

Credits to start a business through crowdlending with MytripleA

MytripleA has an agreement with Mutual Guarantee Societies (MGS) which offers a double advantage. As far as the investor is concerned, it makes profitable and secure investments thanks to the guarantee offered by these MGSs.

On the part of the company or self-employed person who requests a loan to start their business, has the advantage of being able to access a loan by crowdlending with us -which otherwise would not have access-, since the feasibility study of the financing project will be carried out by this MGS, which will study the business plan and will know the guarantee necessary to carry out this financial operation.