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What is Public Financing?

The Public Financing is yet another external financing instrument for companies that need help in this regard, only in this case the help comes from public bodies such as Provincial Councils, Autonomous Communities, the Government...

This type of aid are presented in the form of grants, which will have to be requested from the public body in question with the necessary documentation that proves compliance with the requirements stipulated by the sources of public financing, although they are not a sure guarantee of the concession since access to said aid will not always be approved. .

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The requirements for access to financing are lower than in a private entity

In certain cases, not having to return it or being able to extend the return period up to 10 years

lower interest rates

The financing does not require a declaration before the Bank of Spain

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How does Public Financing work?

The sources of Public Financing for companies are funds that are available to Spanish SMEs in order to offer them certain advantages so that their businesses prosper and develop properly. They are provided by public bodies such as Provincial Councils or Autonomous Communities and its benefits are more advantageous than private or bank financing and the requirements for its granting are much more affordable.

This type of help are presented in the form of grants that are processed directly from the public body that offers them and that in general all Their final objective is to help SMEs to create value, grow and create employment. It is a good option to consider when you want to start a project.

It is very important to take into account that these sources of public financing are not a secure line of access, since they are provided by public entities there is a certain budget, so it may be the case that the aid is not granted. Before this, the requirements must be carefully studied, and especially the situation in which the company is located, since it is very likely that it will be necessary to make the investment before receiving the aid and it is necessary to know if the case can be faced. or even if the money can be returned after receiving it (in the case that the aid is in the form of a loan).

In addition to this, it is advisable to consider that this type of aid in many cases they are granted only for a certain period of time, so it is very important to plan what is going to happen or could happen when that aid ends, especially in order not to fall into financing problems because the deadline has been met by surprise. When you want to access financing of this type, it is very necessary to weigh all the solutions and consequences that may appear.

We must also consider that in the event that the aid is granted, the amount is not immediately available, but since it is a public body there are a series of deadlines for which these entities grant the money, so it would be logical that it takes a certain period of time to be able to access the amount of the aid.

There are different aids that public bodies make available to companies, but there will always be differences between the different public entities that exist in our country. Some of them are:

  • aids for hiring workers
  • Reductions of Social Security contributions
  • aids for business innovation
  • aids to improve competitiveness in the sector
  • aids financial
  • Business consulting
  • aids for investment
  • tax incentives
  • aids for R&D

Some of the organizations that provide these aids are the Official Credit Institute (ICO) or the National Innovation Company (ENISA).

Advantages of Public Financing

  • Less demanding requirements to access financing than in a private organization
  • The beneficiaries of this type of public aid have advantages such as not having to repay the financing (depending on the case) or even being able to extend the repayment term up to 10 years.
  • The interest rates required of these beneficiaries are lower than requesting this aid from a private entity
  • Since they are public aid, the financing is not declared before the Bank of Spain

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