New Adeje and Microbank agreement sees €1,000,000 available for small businesses

[Janet]

Adeje Ayuntamiento and Microbank have created an initiative which will mean up to €1,000,000 becoming available as loans for new small business enterprises and to strengthen existing ones. Adeje Mayor José Miguel Rodríguez Fraga and Microbank CEO Alberto Lopez signed the agreement yesterday morning, and its terms will establish credit facilities for Adeje based autonomos and small businesses. It provides for €1,000,000 of microcredit per annum for approved proposals. The agreement will run until December 31, but could be extended. Mayor Fraga said that "this tool will facilitate the continued creation of jobs in the municipality and will therefore benefit society as a whole by offering an alternative for the business community to find finance".

Among the main objectives of the agreement are to generate self-employment and entrepreneurship by promoting equal opportunities for men and women, new residents, people with disabilities, and those who are vulnerable to financial exclusion. At the same time, it aims to finance the establishment, consolidation or expansion of small businesses and the self-employed so as to contribute to production, job creation, and social progress in Adeje.

Sr Lopez explained that the conditions of the loan include the requirement to submit a project in the form of a business plan either for a new self-employed business or for the consolidation or expansion of an existing one. The project will then be subject to a feasibility study carried out by Adeje Ayuntamiento. Evidently, the business will have to be based within the municipality. Once approved, credit of up to €25,000 will be made available to a maximum of 95% of the investment. The amount borrowed will bear interest of 8.25% and will have to be repaid within five years. No guarantee nor security will be required unless the borrower is a company. JA

[Guanche]

Is this good? Not being a business person I wouldn't know. Only armed with my healthy scepticism of Spanish politics and bureaucracy, I stop short of saying 'This looks good and maybe a step in the right direction'

[Nova]

Last time I checked our personal loan interest rates to individuals (a while ago, I admit), it was about 14-16%, so in comparison, 8% actually looks like a damn good deal for an unsecured business loan.  Even pre-crisis lending rates weren't that low without security.

What's going to be key to this though is the requirement for a good business plan.  Although that will severely restrict those who have access to the loans, it's no bad thing to make sure the money is only available for those who have properly thought it through and will use it wisely.  That's the point after all.  Nice one 

[Janet]

What concerns me most about it is the amount of any possible investment that will need to be shown in the business plan. I can see some people making investments and then the feasibility study says no .....

[Nova]

How much investment is really needed in a business plan though, besides thought, creativity, logic and a bit of decent maths and grammar?