When you want to invest in a new business, it is obvious that you need funds to leverage and, therefore, a viable option is to apply for a credit from a bank to boost your activity. Do you know the steps to follow to obtain your credit in Spain? In this article we tell you everything you need to know!

What is a credit?

To understand the process of applying for financing in Spain, we first want you to know what credit means. And, in a nutshell, when we talk about credit, we are talking about a financial operation in which two parties are involved: a creditor and a debtor.

In this sense, a credit represents a credit of money between a creditor, which is generally a financial institution, and a debtor, which may be an individual or a legal entity.

The truth is that the person requesting the credit assumes the commitment to repay the money received gradually or in a single payment, in the time previously established.

However, not just any person or business can have access to a bank credit, since in order to successfully complete the application it is necessary that you also meet a series of requirements beforehand.

Steps to apply for a credit in Spain

Before presenting the most common requirements requested by banks in Spain, here is a basic step-by-step guide to follow to start the financing process you want to carry out:

1. Identify the current needs of your business: analyze the extent to which you should apply for financing.

2. Quantify what you need: ask yourself how much money you need to meet your objectives.

3. Check that you will be able to repay the credit: make an internal study of your company and analyze the amount corresponding to the installments to be repaid, as well as the associated time frame

4. Design the operation and meet the requirements to apply for your credit: to do so, you will have to present the documentation concerning your company and justify your ability to repay the amount obtained.

5. Present your operation: contact the financial institutions that best suit your needs and apply for your credit.

6. Leverage offsets: you can negotiate financial conditions within your company and improve them (payroll, taxes, social security, transfers, etc.).

7. Read the bank’s conditions for granting you the credit: make sure that the installments and delivery time are as agreed before signing and follow up your case periodically.

You may also be interested in: Pros and Cons of Venture Capital Fund Financing

Requirements

Here are the basic documents required by the lender in case you want to apply for a credit for your business, as well as a list of requirements you will need to validate the correct creation of your company:

On the other hand, in case you are looking to apply for a credit as an individual and use the money for your own interests, it is common that the requirements may vary depending on the financial institution, the amount of money required, as well as its purpose.

Now, the most common documents when these occasions arise are usually simple. The first thing is to be of legal age and have a stable credit history. In addition, you must demonstrate regular income solvency.

In addition, applicants are generally required to provide their DNI, NIF or NIE, as applicable, the account number in which they wish to receive the money, a photocopy of their most recent paychecks, as well as any other regular income they have, and a brief description of their work life (companies they have worked for, activities they perform, among others).

And what happens if you are self-employed? For this type of workers it is common that you have to add to your application a photocopy of the self-employed registration document, the last VAT declaration and the fractioned payments of the IRPF.

You may also be interested in: The Beckham Law: A benefit for foreigners in Spain

What does Ficomsa establish?

As mentioned above, not all lenders in Spain ask for the same documents, but they generally leverage many of the regulations of Ficomsa, the financial institution in Spain.

Ficomsa is a Spanish company expert in financing current assets for SMEs. They provide you with the liquidity you need to boost your business and improve your profitability margins.

Then, with respect to their requirements at the time of granting a credit, in general, personal information such as previous addresses, names, criminal records, academic history, among others, is required.

And, in terms of personal life, it is also very common for the lender to check your professional experience as a manager or business owner; this is especially true in the case of new business credits.

In this sense, a certificate or proof of the business activities and the tasks performed in the course of the same is requested. On the other hand, to complement these essential documents and make your credits you will have to comply with other aspects such as:

Business Plan

Normally you will be required to submit a business plan to accompany the credit application to help determine whether or not it is viable. Therefore, in this plan you will need to specify all documentation relating to the projected financial statements, including profit and loss, cash flow and balance sheet.

Corporate credit report

Do you have a company currently operating in Spain? In these cases, you will need to provide the selected lender with a business credit report and review it before starting the credit application process.

Tax returns

When applying for credit, most financing programs generally require the submission of personal and business tax returns for the last three years.

Financial statements

If you own more than 20% of the shares of your company, you will most likely be required to file your own individual returns or provide your projected financial statements as part of or independent of the company.

You may also be interested in: What is ROA and how to calculate it?

What is a personal guarantee?

If you wish to apply for a credit, it is important to take into account that, according to the Spanish Civil Code, every debtor has the obligation to respond to the payment of the amount agreed with the corresponding financial entity, making use of all his current and future assets.

In this way, the personal guarantee is understood as a way of backing up a credit, in which the applicant’s own solvency is taken as a guarantee.

However, in some situations more than one person is involved in the operation as co-owner of the credit, and it is here where two types of guarantees can be given:

Joint and several liability

In this type of guarantee, the bank proceeds to approach one of the debtors for a percentage of 100% of the total credit and, subsequently, the holders claim the agreed amounts from each other.

Joint and several liability

In this type of guarantee, each debtor will respond to the financial entity with a determined amount of the credit (previously agreed upon), which in its totality represents 100% of the credit granted.

Applying for a credit is a delicate process that, in turn, requires a lot of attention to comply with each of the regulations in force in Spanish financial institutions. In TAS Consultancy we put at your disposal our team of accounting experts to advise you on each of the procedures that you have doubts. So, enter our blog and contact us today!