What are Mutual Guarantee Societies?
The Mutual Guarantee Societies (SGR) They are financial entities that exist in order to facilitate access to a line of credit for small and medium-sized companies.
The SGRs pursue this objective by presenting themselves as guarantors of these SMEs that want to access a line of credit to finance some type of project, as long as it is viable.
For the entity to present the guarantee to a bank, the requesting company must be admitted as a participating partner within the SGR, and contribute capital proportionally to the amount that will be guaranteed. This capital will be reimbursed at the end of the period of the guaranteed operation.
Be the first to take advantage of the potential of these Reciprocal Guarantee Companies
Easy access to lines of credit thanks to the guarantee of the SGR
Less financial risk for the company requesting the loan by having the SGR as guarantor
Better conditions regarding the interest rate and credit terms
Private study of your project to guarantee its viability
How do Mutual Guarantee Societies work?
The Mutual Guarantee Societies are financial entities whose main objective is based on the support for SMEs who need access to financial credits and cannot access it due to lack of resources, by participating as guarantor of the same before a bank.
These companies provide financial support to these SMEs by granting a guarantee what will be presented to banks and other entities in order to grant them credit to these small businesses that do not have the requirements to access these solutions on their own.
Within these societies There are two types of partners. On the one hand there are Protective partners, which are the ones that contribute capital to the company's risk fund and are usually public entities such as autonomous communities or councils. And on the other hand there are participating partners, which is any small or medium-sized company that wants to be part of society by paying a fee to enjoy its benefits.
The key requirement for these Companies to provide support to SMEs that require it is that these SMEs participate as partners within these entities and that they participate in capital at least for a portion proportional to that guaranteed. This capital contribution will be reimbursed at the end of the period in which it has been agreed that the guarantee will be developed.
For the entity to appear as guarantor, A feasibility study of the project will have to be carried out, in order to make the changes that are necessary to ensure its correct development to also ensure that the project will be developed correctly and that it will not be a mistake for the entity to participate in it.
In addition to support as a guarantee, being a participant in Reciprocal Guarantee Societies brings other advantages such as that the companies that form it can provide financial advice to the company that is being endorsed, in order to guarantee the bases of being part of this type of companies (such as to guarantee the participation of the company without actually posing a risk of loss to the company, since within this type of association the risk of a company affects all those that make up the group).
Thanks to the agreements that the Reciprocal Guarantee Companies have with the banking entities, the guaranteed company will enjoy advantages in terms of interest rates and credit granting term, which translate into great savings in financial expenses.
When the endorsement process has finished, the beneficiary company may act in two ways. Either you can request a refund of the amount you have paid to be part of the society as a requirement to obtain your help for financing or you can continue paying that membership fee and continue being part of the association, thus enjoying the guarantees and benefits that this entails.
Advantages of these Companies
Ease of access to financial credit thanks to the participation of the Reciprocal Guarantee Society as guarantor
The financial risk assumed by the company requesting the loan is reduced, since the SGR guarantee assumes the risk of non-payment
The conditions of interest rates and terms of the requested credit improve thanks to the participation of the SGR
To guarantee the viability of the project, the SGR will carry out a study of it, in order to outline what is necessary and guarantee correct development.