Sources of Financing for SMEs?

Being a business entrepreneur has never been so fashionable as it is today, where every day more people join the train of those who start their own businesses on his own initiative and with many projects in mind on how to move forward.

The problem with this comes when it comes to finance such projectsAs it is not always easy to get the necessary capital, therefore it is necessary to have a fairly broad knowledge about each of the options that one has.

Are you interested in knowing the different sources of financing for SMEs what can you apply? Keep reading this post, here we will explain everything you need to know.

How are SMEs in Spain?

Within Spain, the business fabric is formed based on two different types of companies:

• Large companies: which constitute only 1% of the entire network.
• Medium and small companies: they are a more heterogeneous group that is made up of the other 99% subtracting from the network.

The latter are those to whom they are called as SMEs. These have several common characteristics by which they can be easily differentiated, some of which are they are the volume of the business, the number of employees (which never exceeds 250 in total) and many other

Also, on certain occasions, they are seen in severe problems in obtaining financing; especially when starting or if the project does not look successful in the eyes of potential lenders.

What is the profile of an SME that can apply for financing?

It is evident that all enterprises need a certain level of investment, but there are some that require a higher amount of money or have greater opportunities to get investments in their projects.

Those that are in charge of exports or that invest in innovations for the market are the ones that most require a possible monetary investment. Being more critical, looking at the panorama by sectors, those that have the most opportunities are the the construction sector, the manufacturing industry, and those that offer services to other Business.

So, how do Spanish SMEs get financing?

Considering the popularity of this type of business The market has to offer certain solutions or special formulas so that entrepreneurs can get the financing they are looking for so much.

Among the different forms of financing that an SME can obtain are those that we will show below:

Apply for bank loans or credits

This is one of the easiest and most implemented options by Spanish entrepreneurs; It is known that at least 82% of the SMEs that require financing since 2017 went to the bank before considering other ways to get the money.

Whether they are commercial credits, SME loans or lines of credit, are necessary and required by medium and small companies throughout the country to be able to make way for their projects.

Venture capital funds

This formula is widely used by innovative companies that are in a process of expansion, something that requires a good amount of money invested either in premises or raw materials for the production of new products and services.

They are managed by public limited companies that specialize in investing financial resources in various companies, their main objective is to be able to sell your stake in projects that can work in the future, so that they get certain benefits.

Subsidies and public aid

Although it is true that the Public Administration is not in charge of financing business projects of directly, if it makes certain aids available to entrepreneurs that allow them to finance their business.

however, to access these it is important meet a series of exclusive requirementsThis may be one of the reasons why almost all of these grants are intended for technology or innovation projects.

Bartering

This type of service exchanges are based on reaching commercial agreements with other companies within the field, achieving financing through benefits without monetary exchanges.

Although it is not a direct financing system, it can be of great help in reducing many of fixed costs, assuming significant savings that give rise to savings for own financing, which can lead to a Bootstrapping.

These are some of the options that exist to obtain financing within the world of entrepreneurs; Although there are many others, these are the most used because they offer security and a great possibility to start the projects of any SME.