For many small businesses and self-employed individuals, the big question is:
How can I get non-bank financing?
In this article, we’ll try to answer that question. We’ll discuss some of the non-bank financing options available on the market, including our own—WorkCapital SA—which is likely the best solution currently available in the working capital market.
And we’ll explain how to apply for this type of financing, as well as its advantages, risks, and opportunities. We want to help you turn your promissory notes or invoices into a quick source of liquidity.
Typically, in 80% of cases, financing in Spain is obtained through private financial institutions, such as Banco Santander, BBVA, La Caixa, Banco Sabadell, or Bankia—to name the best-known ones.
Thanks to state-guaranteed loans through the ICO, financing is already being granted to many small and medium-sized enterprises (SMEs) and self-employed individuals so they can keep their businesses afloat amid the current health and economic crisis—which is helping to boost our GDP.
There are also other types of institutions from which non-bank financing can be obtained, including public entities such as ENISA (National Innovation Agency) or the CDTI (Center for Technological and Industrial Development)—entities involved in R&D&I that are currently providing non-bank financing to companies in the ICT sector, that is, companies involved in new information and communication technologies.
Yes, of course—this is what is known as non-bank financing, and it’s worth noting that there are many types of financing of this kind, such as:
Crowdlending is a type of crowdfunding (loan-based crowdfunding) that consists of collective financing through loans involving multiple lenders and a single borrower—which can be a company or an individual.
In other words, it is financing provided by a multitude of investors, and through crowdlending companies and their web platforms, these parties are brought together.
These tools serve a dual purpose: first, they allow investors to earn better returns on their savings by lending them to project sponsors (P2P lending); and second, they enable project sponsors to obtain alternative, non-bank financing for their projects in a fast, transparent, inexpensive, and secure manner.
It is a fast form of financing because everything is done online; and it’s also a type of financing that isn’t reported to the CIRBE (Bank of Spain’s Central Risk Information Database), which is very beneficial since it greatly helps companies secure additional financing from traditional banks, should they need it, since the Bank of Spain does not have records of this type of alternative, non-bank financing in its databases.
Another advantage is that, to obtain financing, you’re not required to purchase other financial products (credit cards, insurance, pension plans, or similar) as a prerequisite for the loan requested by the SME—something traditional banks routinely require.
Finally, it’s worth noting that this type of financing for SMEs and the self-employed is very flexible due to its immediacy. It leverages your customer portfolio as collateral to secure the desired financing through both promissory note discounting and factoring.