Now that, according to the macroeconomic data, we are
starting to leave behind the crisis period, it is time to take stock of the
process of legislation carried out during the last years and, particularly, of
the matter, which, year after year, we take forward to September: how to
improve the financing of SMEs in Spain.


In a country in which the business world is
overwhelmingly made up of small and medium-sized businesses (according to
statistics, SMEs represent approximately 99.9% of all companies), any measure
that can improve their sources of funding must be welcomed. Even more so when
we are emerging from a crisis which is not only economic but eminently
financial that has mercilessly restricted the access to bank credit of a
business sector that was particularly dependent on this.


At this time the legislator passed Law 5 of 27 April
2015, to encourage business financing, which, besides its ambitious title, had
two laudable aims: on the one hand, to try to make banking finance more
accessible and flexible to SMEs and, on the other hand, to make progress
towards the development of alternative means of funding.


The first innovation in bank financing of SMEs
consists of making financial institutions inform an SME of its decision not to
renew, terminate or reduce by an amount equal to or greater than 35% the flow
of funding that they were providing, with a minimum notice period of three (3) months,
sufficient time, in the opinion of the legislator, to find new avenues of
funding or adjust their cash flow.


Secondly, the process of re-guaranteeing that the
Spanish Re-Guarantee Organisation offers to mutual guarantee companies has been
altered, by establishing that the re-guarantor will be responsible on first
demand to the creditor in the event of non-performance by the guarantor of his
duties.



Both measures that could have been originally
described as timid have proved to have a rather limited scope in the
enhancement of access to bank funding of SMEs which, if it has improved, it has
been more as a result of macroeconomic circumstances than the boost provided by
these reforms.


On the other hand, we see a greater scope for
innovation introduced by the aforementioned law regarding alternative means of
funding. On the one hand we have the attempt to reactivate securitisation, that
has historically favoured the growth of funding, by making the operation of
these devices more flexible and removing certain obstacles.



Furthermore, reforms in the Stock Market Act have been
introduced to encourage the movement of companies that trade in a multilateral
negotiation system (such as the MAB (Spanish AIM)) to an official secondary
market.


Another of the main innovations is the regulation of
the so-called participatory funding platforms including equity crowdfunding and crowdlending.
These platforms must comply with a series of requirements to be able to finance
their business, by being made subject to the prior approval and supervision of
the CNMV (Spanish Securities and Exchange Commission). Even though the adequacy
of the maximum limits imposed on investment by non-approved investors as well
as the acquisition by projects is debatable, they nevertheless represent a
sensible starting point that goes rather beyond what the first legislators of
this law predicted.

Finally, substantial changes have been introduced
regarding the issuing of bonds. Accordingly, the maximum issuing limit for
public limited companies and partnerships limited by shares has been removed,
while at the same time, limited liability companies are for the first time able
to issue bonds, limiting the issue to a maximum of double the amount of their
own funds (unless the issue has specific guarantees attached).


In summary, we can confirm that even though the new
law has not represented the boost that was expected vis-à-vis bank financing of
SMEs, it is on the other hand a step in the right direction towards the opening
of new channels of alternative funding which would allow businesses to
diversify their sources of liquidity. In any event, in the next term the
legislator ought to continue to work really hard so that next year the access
of SMEs to bank financing will not continue to be unfinished business.