Easier Finance for Small Businesses


In yet a further attempt to stimulate small business growth, from 15 June 2010 and until 31 December 2011, small companies and self employed would now be able to receive finance easier from ICO (Instituto de Crédito Oficial) than a bank.

These loans started on 15 June 2010 and will run until 31 December 2011. Small companies and self employed could now be able to receive finance easier from ICO than a bank. This is because you can now deal directly with this entity without the intervention of any bank. As it is the ICO institution and not the banks that grant the finance, this avoids having to invest in banks’ deposits and similar products.

The main terms are as follows:

  • Only small companies and self employed who have been in business for at least one year can apply for this.
  • 100% of the risk is assumed by ICO.
  • The purpose of the loan can be to purchase an investment asset or for cash flow purposes. (You have to give a reason for the loan but there is no need to provide backup documentation for the purpose of the loan).
  • The maximum amount that can be requested is 200.000 €, in one or several loan applications.
  • The loan amount can be up to to 100% of the investment (VAT included). For the acquisition of vehicles, they cannot have a purchase price over 24.000 € (VAT included). They also finance investment through leasing.
  • The length of the loan can be from 3 to 7 years, depending on the purpose of the loan. Interest only payments can be up to 2 years.
  • The interest rate is Euribor 6 months (currently at 1,06% at 2 July 2010) plus 3,5%. Opening commission is 0,5%.
  • ICO will not grant finance to those businesses that have outstanding debts with either the tax office or social security.
  • It has become apparent that ICO will request applicants to provide guarantees, either personal or asset, to grant the loan.
  • If ICO approves the loan application, funds should be available to the applicant within 30-40 days.

If you are interested in this, to make life easier for you, we can make the application for this loan on your behalf. If you are a client whom we complete your quarterly accounts and compliance work, we will not make any charge for processing this application. If not our fee is 350€. In all cases we would charge a 1% success fee when the loan is granted.

If you have any queries or questions regarding this or other tax matters please do not hesitate to contact either Michael Egan or Miguel Angel Blanca.

Spence Clarke specialises in the provision of Spanish tax, accounts, law and labour services, mainly to foreigners with interests in Spain. Our cross-border knowledge helps clients adapt to the Spanish system with the minimum of doubt and disruption. If you have any questions about this article or any other matter contact us, with no obligation, to see how we can help you.