Following the financial crisis in Spain and its impact on corporate capital and equity, the legislature is trying to establish more efficient funding for businesses. This bill thus aims to: (i) make bank borrowing more affordable and more flexible for SMEs; and (ii) regulate more novel funding methods, such as crowdfunding and crowdlending, which fund projects over technology platforms by multiple investors, without the involvement of traditional banks.

Regarding bank finance, it adopts measures such as:

• Obliging lenders to give notice before any line of finance to an SME is terminated or reduced.
• Requiring financial institutions to prepare a mandatory credit report for the SMEs and show it to them. This must be drawn up with information of standardised quality and with a uniform method, established by the supervisor.
• Facilitating access to funding for Mutual Guarantee companies through an improvement in the legal standards that allow such companies to capitalise the counter-guarantee granted by the Spanish Counter-guarantee Company (Compañía Española de Refianzamiento).
• Establishing the legal framework for Financial Credit Establishments (Establecimientos Financieros de Crédito);
•  Introducing further measures to enhance the transparency, quality and simplicity of securitisation issues in Spain, and
• Eliminating caps on bond issuance.

For the first time ever in Spain, the bill attempts to establish a regulatory framework for a world in which people’s lives and businesses are ever more engaged with new technologies, and raising finance for projects over participative funding platforms is increasingly common. Crowdfunding has shown itself to be a dynamic economic driver in countries such as the United States, which already has crowdfunding legislation, as do the UK, Germany and France.

Thus, the Bill targets those activities whereby investors seek an economic return either by taking out shares or a stake in the business (crowdfunding) or by putting up a loan (crowdlending). Such lending is a core activity for the microcredit industry, working online with borrowers.

The Bill regulates the legal framework and permits required from the government authorities to establish platforms (the CNMV securities commission and the Bank of Spain). It also seeks to protect investors, recognising that this is an intrinsically risky activity in which there is little guarantee of the solvency or feasibility of the project in which they are investing. The Bill includes measures establishing the type of information that should be made available to the investor and caps the overall amount of money invested, depending on whether it is made by an accredited investor or not. Accreditation is a function of the investor’s wealth or income. The Bill also emphasises the transparency that must be built into the system to deal with possible conflicts of interest that may arise in such activity.