Business loan refinance Spain

Business loan refinance Spain involves replacing an existing debt obligation with a new loan agreement that offers more favorable terms. Companies and self-employed individuals (autónomos) in Spain utilize this financial strategy to reduce monthly overheads, lower interest rates, or release capital for investment. The process often requires a thorough reassessment of the company’s financial health by the new lender.

Spanish banks and alternative lenders scrutinize the borrower’s credit history through the Banco de España’s risk information center (CIRBE). A business loan refinance in Spain can take the form of a novation (novación), where terms are modified with the current lender, or subrogation (subrogación), where the debt is transferred to a new financial institution. The choice between these options depends on the costs involved, such as notary fees, cancellation penalties, and the willingness of the current bank to negotiate.

Rates and Fees

The cost of refinancing business debt varies significantly based on the company’s risk profile, the type of collateral provided, and current market conditions. Interest rates for business lending are generally tied to the Euribor plus a margin. The following table outlines typical rates and fees associated with refinancing business loans in Spain.

Fee / Rate Type	Typical Range / Cost	Notes
Nominal Interest Rate (TIN)	3.5% – 9.0%	Depends on solvency and collateral.
Annual Percentage Rate (TAE)	4.5% – 12.0%	Includes commissions and mandatory insurance.
Opening Commission	0.5% – 2.0%	Charged by the new lender on the capital amount.
Early Repayment Fee	0% – 1.0%	Penalty for cancelling the original loan.
Notary Fees	€300 – €1,000+	Required if the loan is notarized (Póliza or Escritura).
Registry Fees	€200 – €600	Applicable if real estate collateral is involved.
Appraisal Fee (Tasación)	€300 – €1,000	Required for mortgage-backed business loans.
Approval Time	2 – 6 Weeks	Longer for complex operations involving collateral.

Refinancing costs must be calculated carefully to ensure the long-term savings outweigh the immediate expenses. The Early Repayment Fee (Compensación por reembolso anticipado) is regulated but can still represent a significant cost if the original loan principal is high. For loans regulated under the Consumer Credit Act (Ley 16/2011), fees are capped, but corporate loans often have freer terms agreed upon in the contract.

Notary involvement is standard in Spain for business loans to ensure the debt is an executive title (título ejecutivo). This allows the bank to enforce the debt through the courts more easily in case of default. If the refinance involves a mortgage on a commercial property, the transaction must be recorded in the Property Registry (Registro de la Propiedad), incurring additional taxes and fees.

Types of Business Loan Refinancing

Refinancing in Spain is not a single product but a set of legal and financial procedures. The correct method depends on whether the borrower stays with the same bank or moves to a competitor.

Novation (Novación)

Novation involves renegotiating the terms of an existing loan with the current financial institution. This is often the cheapest option as it avoids the cancellation of the old loan and the formal opening of a new one with a different entity. Companies often request a novation to extend the repayment period (carencia or ampliación de plazo) or to lower the interest margin. Banks are not legally obliged to accept a novation request unless it was pre-agreed in the initial contract.

Subrogation (Subrogación)

Subrogation allows a business to move its debt to a new bank without cancelling the original loan entirely. The new bank pays off the old bank and assumes the creditor position. This is common with mortgage-backed business loans. The Spanish Mortgage Act (Ley Hipotecaria) and specific subrogation laws regulate the costs, often limiting the compensation the original bank can demand. This method fosters competition between banks, as the original bank may offer a counter-offer to retain the client.

New Loan Origination

In many cases, a business loan in Spain is taken out specifically to pay off existing debts. This is technically a debt consolidation or a refinancing via cancellation. The borrower secures a new loan with completely new conditions and uses the funds to settle the previous obligations. This approach provides the most flexibility regarding terms and collateral but incurs the highest setup costs, including opening fees and taxes (Stamp Duty or AJD if a notary deed is used).

The Role of CIRBE in Refinancing

The Central de Información de Riesgos del Banco de España (CIRBE) plays a pivotal role in any refinancing decision. CIRBE is a database maintained by the Bank of Spain that records virtually all loans, credits, and guarantees held by financial institutions in the country.

Reporting Thresholds

Financial institutions must report any cumulative risk exposure to a single borrower that exceeds €1,000 (previously €9,000). This includes business loans, credit lines, and guarantees. When a business applies for refinancing, the new lender requests a CIRBE report to view the company’s total indebtedness. This report does not show a score but lists all outstanding debts, the entities owed, and the status of those debts.

Impact on Approval

Banks use CIRBE data to calculate the company’s global debt capacity. If the CIRBE report shows high utilization of credit lines or existing arrears, approval for refinancing becomes difficult. The data is updated monthly, meaning any reduction in debt takes a few weeks to reflect in the system. Accurate CIRBE data is essential for banks to comply with responsible lending criteria mandated by the Banco de España.

Credit Checks and Solvency Assessment

Beyond CIRBE, lenders perform extensive solvency checks. For businesses, this involves a deep dive into accounting records and tax returns.

Required Documentation

To assess eligibility, Spanish lenders require a comprehensive document package.

• Tax Returns: Corporate Income Tax (Impuesto de Sociedades, Model 200) for the last two years and quarterly VAT returns (Model 303) and the annual summary (Model 390).
• Balance Sheet and P&L: An updated balance sheet (Balance de Situación) and Profit and Loss account (Cuenta de Pérdidas y Ganancias).
• Pool Bancario: A detailed list of all current bank debts, specifying the entity, outstanding amount, maturity date, and monthly installment.
• Bank Statements: Usually the last 6 to 12 months of movements to verify cash flow and existing expenses.

ASNEF and RAI

Lenders check negative solvency files such as ASNEF (Asociación Nacional de Establecimientos Financieros de Crédito) and RAI (Registro de Aceptaciones Impagadas). RAI is specifically for legal entities (personas jurídicas) and tracks unpaid drafts and promissory notes. A presence on RAI or ASNEF signals default, making traditional bank refinancing nearly impossible. In these cases, businesses may need to seek alternative private lending, often requiring real estate collateral.

Refinancing ICO Loans

Following the COVID-19 pandemic, many Spanish businesses hold loans backed by the Instituto de Crédito Oficial (ICO). Refinancing these specific loans involves strict regulations. The Spanish government established a Code of Good Practices (Código de Buenas Prácticas) allowing for the extension of maturity dates or the conversion of these loans into participatory loans.

However, refinancing an ICO loan into a standard private loan requires the cancellation of the state guarantee in most cases. Banks are cautious about this because they lose the government backing that covers 70-80% of the risk. Businesses looking to refinance ICO debt must demonstrate strong recovery and solvency to convince a lender to take on the full risk without state coverage.

Collateral and Guarantees

Refinancing often requires the borrower to provide security. The type of collateral dictates the interest rate and the loan-to-value (LTV) ratio.

Personal Guarantees (Aval Personal)

For Small and Medium Enterprises (SMEs or Pymes), banks frequently require the personal guarantee of the directors or partners. This means that if the company (SL or SA) defaults, the bank can seize the personal assets of the guarantors. This bypasses the limited liability protection of the company structure for that specific debt.

Real Estate Collateral (Garantía Hipotecaria)

Using commercial or residential property as collateral allows for lower interest rates and longer repayment terms. A mortgage loan in Spain for business purposes is regulated differently than a consumer mortgage. While the Ley 5/2019 protects individual borrowers, businesses have less protection regarding transparency and floor clauses. However, the valuation (tasación) must still be performed by a Banco de España-approved appraiser.

Pledge of Assets (Pignoración)

Businesses can also pledge financial assets, such as investment funds, shares, or future invoices (factoring), to secure a refinanced loan. This is common for short-term credit line restructuring.

Legal Framework and Consumer Protection

The regulatory environment for business lending differs from consumer lending, but overlaps exist, particularly for autónomos (sole traders).

Consumer Credit Act (Ley 16/2011)

This law applies primarily to consumers but covers autónomos if the loan purpose is mixed or unclear. It mandates transparency in the APR (TAE) and limits early repayment fees. However, loans strictly for business purposes fall outside this protection, allowing lenders and businesses to negotiate terms more freely.

Banco de España Supervision

The Banco de España supervises banking conduct. While it does not intervene in individual commercial decisions, it ensures banks follow transparency protocols. Lenders must provide a FEIN (Ficha Europea de Información Normalizada) or a similar binding offer for mortgage-related loans, giving the borrower at least 10 days to review the conditions before signing.

Electronic Signing and Identification

Modern refinancing in Spain often utilizes digital processes. Borrowers identify themselves using their DNI (Documento Nacional de Identidad) or NIE (Número de Identidad de Extranjero). Contracts are frequently signed via recognized electronic signature platforms or using a Certificado Digital. These digital signatures have full legal validity in Spanish courts, provided they meet the eIDAS regulation standards.

Debt Consolidation for Businesses

Companies with multiple credit lines, credit cards, and equipment loans often struggle with cash flow due to varying payment dates and high interest on unsecured debt. A debt consolidation loan in Spain merges these liabilities into a single payment.

This process simplifies treasury management (tesorería). Instead of managing five different payments, the company manages one. The goal is to extend the amortization period, which reduces the monthly financial burden, although it may increase the total interest paid over the life of the loan. Banks analyze the Debt Service Coverage Ratio (DSCR) to ensure the new single payment is sustainable based on the company’s EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization).

Alternative Financing vs. Traditional Banking

When traditional banks reject a refinance application due to strict risk criteria or sector limits, businesses turn to alternative lenders.

Private Equity and Direct Lending

Private lenders and investment funds offer capital to companies that may not fit standard bank profiles. These loans are often interest-only (carencia de capital) for a period, followed by a balloon payment. They are more expensive than bank loans but offer speed and flexibility.

Crowdlending

Crowdlending platforms authorized by the CNMV (Comisión Nacional del Mercado de Valores) allow businesses to refinance debt by borrowing from a pool of private investors. These platforms require detailed financial disclosure but can be faster than traditional banks.

Tax Implications of Refinancing

Refinancing has tax consequences that must be accounted for in the Impuesto de Sociedades (Corporate Tax).

• Deductibility of Interest: Interest paid on the new loan is generally a tax-deductible expense. However, Spain limits the deductibility of net financial expenses to 30% of the operating profit (EBITDA) for amounts exceeding €1 million.
• Fees: Opening commissions, notary fees, and appraisal costs are deductible expenses in the year they are incurred.
• AJD Tax: If the refinancing involves a mortgage deed, the borrower (or the bank, depending on the specific legal setup and recent court rulings regarding who pays AJD in business contexts) must settle the Actos Jurídicos Documentados tax.

Step-by-Step Refinancing Process

The timeline for refinancing a business loan in Spain typically spans several weeks.

1. Financial Audit: The business must update all accounting records and ensure no tax debts exist with the Agencia Tributaria or Social Security (Seguridad Social).
2. Market Research: Borrowers compare offers. Using a loan calculator helps estimate the new monthly installments under different interest rate scenarios.
3. Application: Submission of the Pool Bancario, tax returns, and business plan to the selected lender.
4. Risk Analysis: The bank’s risk department analyzes CIRBE data and financial ratios.
5. Valuation: If collateral is involved, an independent appraisal is ordered.
6. Approval and Offer: The bank issues a binding offer outlining the TIN, TAE, and fees.
7. Notary Signing: The director or authorized representative signs the public deed (Escritura Pública) before a Spanish notary.
8. Disbursement: The funds are used to cancel the old debt, and any remaining capital is transferred to the company account.

Refinancing for Autónomos

Self-employed individuals face a unique landscape. Their business and personal finances are often intertwined. When an autónomo refinances, banks assess both business income and personal assets.

Unlike corporations, autónomos respond to debts with all their present and future assets unless they are registered as an Emprendedor de Responsabilidad Limitada (ERL), which protects their primary residence up to a certain value. Refinancing for autónomos often resembles personal loan refinancing but requires business documentation like the Model 130 (quarterly income tax payment) and Model 303 (VAT).

Risks of Refinancing

While intended to improve financial health, refinancing carries risks. Extending the loan term reduces monthly payments but increases the total interest cost. Variable interest rates expose the business to market fluctuations. If the Euribor rises, the cost of the debt increases.

Furthermore, refinancing often resets the amortization schedule. In the French amortization system used by most Spanish banks, interest comprises a larger portion of the early payments. Restarting a loan means paying mostly interest again, delaying the reduction of the principal capital.

Documentation Validity and Translation

For businesses with foreign directors or parent companies, documentation becomes more complex. Spanish banks require all documents to be in Spanish. Papers from foreign parent companies must be sworn translated (traducción jurada) and often apostilled. The lender must also verify the Ultimate Beneficial Owner (UBO) or Titular Real to comply with anti-money laundering (AML) laws. This declaration identifies the individuals who ultimately own or control more than 25% of the company.

Impact of Arrears on Refinancing

If a business is already in arrears (mora), refinancing is critical but difficult. Spanish banks classify debt as “doubtful” (dudoso cobro) once payments are 90 days overdue. At this stage, the bank must provision funds against the loss, making them reluctant to increase exposure.

Refinancing in this context is often termed “restructuring.” The bank may agree to a restructuring to avoid a default classification, which damages their balance sheet. This might involve a grace period (carencia) where only interest is paid, giving the company time to recover liquidity. However, this usually results in a lower credit rating for the business within the bank’s internal scoring system.

For generic information on borrowing options in the country, reviewing the broader landscape of loans in Spain provides context on how the credit market operates across different sectors.