Among the various funding formulas that technology entrepreneurs and startup founders usually use, the most common are to use their own funds, the so-called FFF (Friends, Family and Fools), business angels or venture capital firms. Some startups also manage to obtain aid, grants or public loans. The truth is that leaving aside ENISA loans, it is a less explored route than the first alternatives. Bank loans are an underexplored route, since due to the volatility and high degree of uncertainty of emerging companies - and that a very high percentage of these companies close in 3 years - banks and banks are not very interested in lending them their money. However, there are tools so that these projects can gain the trust of entities. At the local level, entrepreneurs in the Community of Madrid can turn to Avalmadrid, a Mutual Guarantee Company that allows self-employed workers and small and medium-sized companies in the Community of Madrid to finance themselves. Its mission is to provide them with very favorable funding both in terms of time and cost and to grant guarantees and bonds to Public Administrations and to third parties.Avalmadrid provides SMEs and the self-employed with different formulas to cover their liquidity needs. However, what it is mainly known for is that it acts as a guarantor against financial institutions so that entrepreneurs obtain loans with advantageous conditions.Specifically, the Avalmadrid Bank Guarantee gives Madrid startups and SMEs good support so that they can enjoy long payment periods, preferential interest rates or minimum costs in these loans.
Endorsements before third parties
This body, which depends on the Community of Madrid, articulates its bank guarantee in three aspects:
- Public Administrations- SMEs and self-employed workers who need to provide guarantees in the face of commitments made with public bodies and administrations can be beneficiaries of the same. For example, in tenders and tenders for contracts, supply contracts, service contracts, execution of public works, grant advances, guarantee of good operation, etc.- Customers, suppliers and creditors- It focuses on obtaining technical guarantees to guarantee its obligations to third parties. In this case, the beneficiaries are SMEs and the self-employed who require the provision of service guarantees or are interested in the release of withholding taxes. These can be projects related to construction, engineering, business services, the press, recreational machines, etc.- International Tender Guarantee- In this case, Avalmadrid acts as an intermediary to support Madrid's SMEs in obtaining guarantees for international tenders, exports, execution of works abroad, opening of new branches, etc.
Apart from these guarantees, Avalmadrid also makes it easier for SMEs and the self-employed to obtain funding focused on making an investment. To this must be added their Plan Impulsa Pyme, which has financial products adapted to the working capital or liquidity needs that arise in Madrid's SMEs. Thus, up to a maximum of 1 million euros are offered, through credit policies or treasury loans. The former would have an amortization period of 3 years, while the latter would be 4 years. More: Grants for startups and SMEsFinancing startups MadridStartup funding sources
