Only 22% of SMEs in Spain try to get financing without having to go to a traditional bank, compared to 70% in the United States, 55% of SMEs in France or 45% in Germany, according to a study by the University of Valencia. Some data that make small businesses in our country one of the most dependent on banks to get financing. In fact, according to a study prepared by Inbonis, it states that only 3% of loans for companies in Spain come from non-banking financial entities.
Are bank or non-bank loans better?
Although both serve the same purpose, – financing small and medium enterprises – their characteristics are very different and the virtues that an SME can find in one type of financing can be inconvenient for another company. Knowing the different characteristics, both the advantages and the disadvantages of each type of loan will help us to choose in a more informed manner the type of financing that best suits our business.
Thanks to the advance of new technologies, there are many new fintech that allow us to obtain financing for our business without having to go to a bank, both loans for “traditional” companies, as well as new financing formulas increasingly popular as crowdlending – that in Spain it already has more than 33 operating platforms according to a report prepared by Crowdsurfer-.
This type of loans tend to have slightly higher interest rates than bank loans, but in exchange, they have a concession speed of between 1 and 10 days, have less related expenses, do not require a change of bank and do not require the hiring of linked products.
Due to the ECB’s new stimulus measures implemented since March this year, bank loans for SMEs have lowered their interest and increased their offers to become more competitive, in fact in 2015, the average interest on loans for companies was located in 4.6 %, according to the Bank of Spain. However, according to the study conducted by Inbonis, SMEs pay up to 10% for these loans due to the sale due to other additional expenses such as commissions (2%), cross-selling such as direct debit of social insurances or taxes (1.29%) and personal guarantees (2.10). In addition, the average waiting time until the granting of the loan is two months.
However, these two ways of obtaining loans for our SME are not exclusive, but allow us a symbiosis. Just as we diversify suppliers, it is important to have different funding sources. In this way, we can take advantage of both types of loans and not tie ourselves to a single entity as our only option to obtain financing.