Development of alternative financing in Spain 2023

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2023 has been a year marked by inflation, interest rate increases and political uncertainty in Spain. This is the main reason why the Spanish company is opting for alternative financing. 

In this article we show you the evolution that non-bank financing has had, until reaching the current situation. We also show you the reasons why it has achieved strong development and some of the main mechanisms that you have at your disposal to obtain funds without resorting to the banking system.

Alternative financing and its development in Spain

We understand by alternative financing the set of financial sources outside the banking system, but through independent private entities, such as debt funds (direct lending). That is, it is a non-bank financing model.

Although alternative financing is accessible to all types of companies (including SMEs), companies have historically maintained a close relationship with banks. 

In fact, Spain was one of the countries with the greatest banking dependence. The lack of diversification, flexibility and agility when it comes to obtaining liquidity from the banking system is one of the reasons for the weakness of SMEs.

It was not until 2008, after the outbreak of the global financial crisis, when the need to diversify financing sources became evident due to the problems that banking presented and the consequent restriction of access to credit suffered by the business community. .

According to data from the Bank of Spain, since 2009, bank loan balances have been gradually reduced year after year. 

In 2010, the Basel Committee on Banking Supervision carried out a set of measures to respond to the crisis, strengthening the regulation, supervision and risk management of banking entities (what is known as Basel III). 

Changes in regulations brought higher financing costs for SMEs and a tightening of the conditions for access to credit, which boosted the growth of alternative financing. In other words, Spanish companies are becoming less dependent on the banking system.

What situation is alternative financing in Spain?

The differential between alternative credit and bank credit has been substantially reduced in 2023. In other words, never before has the debt that Spanish companies maintain with banks been below half of their total debt. 

Among other reasons, this fact is due to the tightening of banking conditions for requesting credit given the economic situation. Furthermore, the rise in interest rates narrows the gap between bank and non-bank financing. Therefore, it is more attractive to resort to private debt.

In short, we are facing a process of debanking. As indicated by the III Barometer of Debt Fund Financing (made by BDO), a 76% of this type of investment vehicle has increased its assets over the last two years.

On the other hand, the results of the Third Business Barometer and Alternative Financing show that SMEs value the ease of accessing financing (lower requirement for guarantees), the flexibility in terms and the agility in the processing offered by alternative financing sources.

Be that as it may, the fact is that all the data and statistics point to an increase in non-bank financing in the total debt of Spanish companies.

What financing alternatives exist?

Currently, any company, regardless of its type, can access this type of financial products, which have been increasing and maturing in recent years.

In 2015, mechanisms such as the alternative stock market, venture capital entities, the leasing either renting They were already showing signs of improvement. However, the development of technology has led to the development of other channels, such as crowdfunding or P2P business credit. 

On the other hand, some products are designed to meet short-term financial needs, such as factoring and the confirming. There are also alternative real estate financing solutions, such as Bridge Loan for Developers.

However, given the large number of financial sources that the company has at its disposal, What criteria should be followed to select the most advantageous financing alternative?

In this sense, the key to success lies in knowing what situation the company is in, precisely defining its financial needs and knowing well the available financing sources. 

If you have any questions or need information about which alternative financing channel is most appropriate for your company's needs, contact us. At Alter Finance we are a team of specialized consultants with the ability to offer you the best solution.

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