Business Startup: Financing a Business in Spain

Establishing a business is a daunting step. It is even more so when you intend to do that as a foreigner in another country. Lots of things come into play: would the locals be welcoming? Is the business climate perfect for my product? What’s the tax situation there? And most importantly, how do I finance my business? The answer is often banks and loans.

While wealthy persons or established organizations would dig into their funds, individuals who want to launch start-ups don’t enjoy that luxury. Online Spanish banks can come in handy in granting loans for entrepreneurs.

Spain ranks high on the list of places with ease of doing business, and now is the best time to open a business in Madrid. This article will look at methods by which you can finance your business in Spain.

 1. Personal Funds

While personal funds are not readily available for young entrepreneurs, it is the shortest and least complicated route to financing your business. This method grants you autonomy, and you do not need to worry about repaying loans.

It also extends to other informal means of capital sourcing, e.g., receiving donations from family and friends. In business, the less formal the financing method, the more advantageous it is.

 2. Crowdfunding and Start-up Competitions

Crowdfunding has become a popular method of sourcing funds. Visit Opinion Espana to access reviews on crowdfunding platforms like Stockcrowd in. If the campaign generates traction (as it is wont to do), it could also attract potential investors. There are annual startup competitions in Spain, and one might be fortunate to benefit from them. One of them is La Caixa’s Emprendedor III.

 3. Banks

Banks are more stable than capital markets. In Spain, most SMEs turn to banks for loans. However, banks are not run by Santa Clauses. They would only offer loans to companies that have proven to be creditworthy. For new businesses, creditworthiness is complex to ascertain.

However, a solid business plan might give you an edge. The Instituto de Crédito Oficial (ICO) — a public bank affiliated with the country’s Ministry of Economy — is one of the public financial institutions dedicated to servicing SMEs. You can look up their site and those of other banks like BBVA to see the loan packages you qualify for.

 4. Business Angels

Yes, as the name implies, guardian angels — but, of course, in human form. This is another form of business financing in Spain. Business Angels is a term for wealthy individuals interested in funding entrepreneurs. Of course, one needs to develop an attractive plan to grab the attention of these angels.

The downside of this method is that you might be required to relinquish a part of your company to these investors. A plus, though, is that you might enjoy informal mentorship under these angels, who are often very successful businessmen, and might be able to tap into their network.

 5. Venture Capitalists

Venture Capital Firms are similar in operation to Business Angels. The difference is that business angels are individuals, while venture capital firms are organizations. There are a lot of VC firms sprouting in Spain annually. You will have to conduct your research and reach out to those compatible with your business.

The gap between a business idea and its actualization is funding. In this article, we have looked at the most common financing methods in Spain. All of these methods have their pros and cons, and it is up to you to decide which method to use. We hope that you find the article helpful.