Ways to fund a new company in Spain

Terms used

• ENISA — ENISA is a state-owned lender that gives participative loans to small and new innovative companies.
• CDTI — CDTI is the public agency that funds and supports company research and technology development projects with loans and grants.
• ICO — ICO is the state financial institution whose credit lines are delivered to businesses through ordinary banks.
• SGR — An SGR is a guarantee society that backs a company's bank loan so the bank lends more readily.
• CERSA — CERSA is the state-owned company that counter-guarantees the guarantees given by SGRs.

Key rules

• ICO lines: You borrow from a bank, not from ICO itself, when you use an ICO line.
• SGR: A guarantee society backs your loan to the bank. It does not lend you money.
• Open calls: Whether a public programme is open depends on the managing body's current call and budget.
• Grants: Grants come from the State, your region and EU funds, and you do not repay them.
• Equity: Investors take a share of the company instead of asking for fixed repayments.

Programmes, calls and conditions change often, so confirm with ENISA, CDTI, ICO or your regional agency that a line is open before you plan around it.

The five routes at a glance

A new company in Spain can draw on five kinds of funding. Most founders combine two or more. The decision and comparison blocks below help you choose. This page shows what exists.

1. Bank loans and credit lines

Banks lend to new companies, usually against a personal guarantee from the founders. A new company has no track record, so banks often want extra security. That is where a guarantee society can help (see route 5).

2. Public loans

Three public bodies matter most:

• ENISA gives participative loans. These are loans whose return is linked to how the company performs. The national lines have normally included Emprendedores, Jóvenes Emprendedores and Crecimiento.
• CDTI funds research and development projects with loans and grants. Its instruments have included Neotec and PID.
• ICO runs credit lines, but you do not borrow from ICO directly. The loan comes from a bank that uses the ICO line.

3. Grants

Grants do not have to be repaid. They come from the State, from your autonomous region and from EU funds. Each has its own calls, deadlines and eligibility rules, so check your region's business development agency as well as national bodies.

4. Equity investors

You can sell part of the company instead of borrowing. Sources include:

• you and your co-founders
• business angels
• venture capital funds
• public-backed funds, such as those managed by Axis (part of ICO) and CDTI's Innvierte
• crowdfunding

Investors take a share of the company and a say in decisions. You make no fixed repayments.

5. Guarantee societies (SGR)

A sociedad de garantía recíproca (SGR) does not lend. It guarantees your loan to the bank, which can make approval easier and terms better. The SGRs are in turn backed by CERSA, a state-owned reguarantee company.

Which programmes are open now

The programmes named above are the national ones that have normally been open to new companies. Whether a given line is open today depends on the call and budget set by the body that manages it. Before you plan around any of them, confirm with that body that it is accepting applications and that your company qualifies.

How to choose

• Need a modest amount and can offer a guarantee: start with a bank loan, possibly with an SGR.
• Developing technology or research: look at CDTI and ENISA first.
• Want to avoid debt and accept sharing ownership: look at equity.
• Want money you do not repay: look at grants, and allow time for the application.

Choosing between options

Which funding route fits your new company?

• Bank loan or credit line: You have a steady plan to repay and can offer a personal guarantee or an SGR guarantee.

• Public loan (ENISA, CDTI or ICO): You are an innovative or growing company that wants a loan without giving up shares. ICO lines go through your bank.

• Grant: Your project fits a State, regional or EU call, and you can fund the rest of it yourself.

• Equity investors: You are ready to give up a share of the company for money and advice from business angels, venture capital, public-backed funds or crowdfunding.

• Guarantee society (SGR): A bank wants more security than you can offer, and a guarantee would let the loan go ahead.

Start with what you can offer: security points to a bank loan or SGR guarantee, an innovative project points to public loans or grants, and a wish to share ownership points to equity.

Bank loan, public loan, grant and investor compared

Match the source to what you can afford to lose: money, ownership or personal assets. Speed matters too, because the fastest money is not the cheapest.

What to watch for

• Bank guarantees can be replaced. A guarantee from a mutual guarantee company (SGR) or ICO cover can take the place of your personal guarantee. The SGR charges guarantee fees and asks you to put in membership capital.
• ENISA sits behind the bank. Its loans rank below bank debt. That is why they are often combined with a bank loan, and why ENISA wants your own funds alongside.
• Grants need cash up front. Some calls allow an advance, but this often needs a bank guarantee. Small self-employment aid is often paid as a single lump sum.
• An SL has fewer investor options than an SA. An SL cannot issue bonds or offer its shares to the public. It can still take investors through a capital increase or a convertible loan, which needs approval at the general meeting.

Rates, amounts and payment terms change with each call and each lender. Confirm current figures with the lender, ENISA, CDTI or the grant's call before you decide.

Frequently asked questions

What is an SGR and how does it help me get a bank loan?

An SGR is a guarantee society that gives your bank a guarantee, so the bank may lend to you when you have little security of your own. The SGR is itself backed by CERSA, a state counter-guarantee body. Ask your bank whether it works with an SGR.

Do ICO lines mean I borrow from ICO directly?

No, ICO lines are channelled through banks, so you apply to a bank and not to ICO itself. The bank decides on your application within the line's conditions. Ask several banks which ICO lines they currently offer.

Which public bodies lend to new companies besides banks?

ENISA offers participative loans, with lines for Emprendedores, Jóvenes Emprendedores and Crecimiento. CDTI funds research and development projects through instruments such as Neotec and PID. Check each body's website for open calls before you apply.

Can I raise equity from someone other than my own savings?

Yes, you can bring in business angels, venture capital, public-backed funds or crowdfunding. Public-backed funds include those managed by Axis/ICO and CDTI's Innvierte. Each investor takes a share of the company in return.