The bank loan is when the financial institution puts at the disposal of a borrower who undertakes to return the requested capital , under the conditions that have been agreed upon and signed.

Types of bank credit in Spain

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The type of credit is classified according to its destination or purpose since the consumer loans are mainly requested by the natural person in case of a wedding or a trip, this loan is of very few funds and the term for payment is very short.

Study loan, this is to finance tuition for the university, postgraduate or a master. The interests of this credit are much more economical compared to personal loans.

Going into matter, the loan for companies is the most used to obtain financing for the investment of the purchase of the premises and the purchase of the production. Years ago there were the so-called commercial banks that financed this type of credit.

Is it easy to apply for loans to open a business?

For many entrepreneurs and the desire to have a business of their own is a goal to be achieved, although for many it is a great challenge to be able to receive a loan from the bank, since at the time of granting the loan the bank does not dare much.

Banks in Spain do not dare to grant loans to foreigners who reside in this country and have properties. There is a European legislation which indicates that a loan can be granted to residents and non-residents.

Unfortunately, banks often reject these requests with the excuse that they require guarantees that the company will receive money often, which is totally absurd if the company does not even exist.

A bank in Spain conducted a survey where they literally state that “in the quarter of 2017 the loan approvals in Spain were stable”.

Specialists say that if you have excellent capital you can shape ideas. The Official Credit Institute provides help to companies to make productive investments in Spain, it is carried out in financial entities that can charge a commission when the operation starts.

The microcredits are perfect for small companies that have little economic capacity to open their own business, the positive side of this loan is that they do not require guarantees or personal guarantees.

There are credit policies with which the bank makes available to the employer a certain amount that can meet their needs, many banks implement bills of exchange or standardized bills and have a commission in exchange.

Requirements for requesting credit

Each bank has its style and types of loans to offer for their clients who wish to open their own business, just as interest rates vary a lot especially over time to repay the loan. There are usually parameters or requests for common documents.

If it is a legal entity which wishes to start and open its own business and does not have a credit history, it can not present financial statements or VAT, so the most common requirements to request are:

  • DNI of the applicants
  • Declaration of the income of the applicants
  • Autonomous receipt
  • A simple note of the assets that could guarantee the loan
  • Business plan

If the loan is for an expansion or a new company, the bank will request the following:

  • DNI of the applicants
  • CIF of the company
  • Declaration of the income of the applicants
  • Autonomous receipts or payrolls of applicants
  • Minutes of the incorporation of the company (if in case any changes have been made such as name changes, new members, among others, must also include it and be notified when requesting the loan.
  • Own resources available to the company of said enterprise
  • Business plan
  • Mortgage guarantee (if the properties already guarantee a loan they have to indicate it)

Characteristics of bank loans

Before applying for a bank loan there are certain points or characteristics that should be considered and taken into account:

  • How is the interest rate?
  • Know which are the opening commissions and the cancellation either total or partial.
  • Other expenses that you have in your daily life, remember that a timely payment and without delays will guarantee that when you require another loan the bank will give it for your payment history
  • The time you have to return the money that the bank lends you (if it seems very little time or a lot)

Advantages and disadvantages of bank loans

We must bear in mind that as many things have their good side and not so good side, therefore before applying for a bank loan we must take into account its advantages and disadvantages such as the following:

Advantage

  • It allows you to quickly and effectively open your own business
  • The payments you must make are relatively simple, since they are through regular installments (which are usually monthly)
  • You can be aware at all times the debt you have active with the bank

Disadvantages

  • Determines in a mandatory way that not only you made the payment of the debt but also the payment of interest
  • It is not possible to reuse the funds once you have used them, which is something totally different from what happens with credit cards
  • It is extremely important that you provide guarantees that guarantee the amount borrowed

Curiosities

Sources of the Bank of Spain, have indicated that a regulatory framework is being made, since the policy of credit prices are of the utmost importance since they should cover the financing costs and risks that exist in each type of operation.

It has been explained that Spain is one of the few countries that does not have sufficient authority to modify the design of certain tools that would help reduce the volatility of credits and even greater, of economic cycles.

Currently, the Bank of Spain is demanding in itself to slow down loans in times of expansion.