When launching a Startup, many wonder how to get funding. Next, we will describe one of the main sources of financing for entrepreneurs, which also have very favorable terms for start-ups. The ENISA financing source is also a very interesting option because it allows new companies to obtain financing for growth without diluting the founders.
What is a Enisa Loan?
Enisa loans are loans provided by ENISA, a body that depends on the General Directorate of Industry and Small and Medium Enterprises, integrated, in turn, in the Ministry of Industry, Commerce and Tourism to promote the entrepreneurial ecosystem and provide founders and new fund companies to start their activity.
ENISA currently has different programs that are adapted to different profiles of entrepreneurs. Each one has slightly different conditions and are aimed at startups founded by different profiles and at different stages. The different programs that ENISA currently has are the following:
– Young Entrepreneurs
– Digital Entrepreneurs
In this article we will focus mainly on the Entrepreneurs program since this is the program that has been requested by SNAB and in which we currently participate.
For more information, you can directly visit the ENISA website https://www.enisa.es/
The objective of the entrepreneurs program is to provide financing to SMEs or newly created startups in their initial stages to finance the investments that the company requires in its initial stage. To apply for this loan, there is no age limit, and it is open to all business sectors except real estate and finance.
What are the Terms of the Loan?
- Minimum amount: €25,000
- Maximum amount: €300,000
- The maximum amount will also be limited by the company’s own funds since the loan may not exceed them.
- Maturity: 7 years
- Amortization: Lack of 5 years, that is, without amortization of the principal until year 5
- First tranche: Euribor + 3.75%
- Second tranche: a variable interest based on the financial profitability of the company, with a maximum limit established between 3% and 6%
- Opening Commission: 0.5%
- Amortization of interest and principal is quarterly
What are the requirements to apply for the loan?
- Be a company considered SME in the European Union
- Have a legally constituted company
- The company must be established for a maximum of 24 months prior to the application
- The business model has to be innovative
- The accounts of the previous period must have been deposited in the commercial registry
What are the advantages of requesting a loan from ENISA?
The main advantage of applying for a ENISA loan for a newly created company or startup is that it provides a source of financing without dilution for the founders with very favorable terms. This makes it possible to significantly extend the “runway” or the months until the startup’s available cash runs out. In addition, it can be a very interesting method to finance the startup until the next round of investment, so that the startup achieves better metrics and a higher valuation at the time of closing the next round.
In addition, as we mentioned in the terms section, the loan has a 5-year principal grace period. This means that during the first 5 years, the company does not have to repay the principal of the loan. During this period, only interest will be paid. This is a very advantageous condition for the company, since it will allow it to initially have a lot of cash, which is the moment when it is most needed. In year 6, the company should be able to be self-sufficient and cover the future principal payment either with the excess cash generated by the company’s sales or by refinancing the ENISA loan through a new loan or through an investment round, in which will allocate the necessary amount to amortize the outstanding amount.
What are the drawbacks of applying for a loan from ENISA?
In the first place, unlike other sources of financing for startups such as grants, the principal of the loan must be repaid, since it is a debt for the company. However, due to its favorable conditions, we believe that it is a very attractive source of financing. On the other hand, it is important to mention that if as an entrepreneur you are thinking of doing the “Flip”, or moving the company to the United States, it is better that you apply for the ENISA loan after incorporating in the United States. Since having a current loan with public institutions can substantially delay the transfer of the company.
How can Snab help you with the ENISA loan?
Snab is a cloud platform that assists with the management and automation of payments between companies (B2B) and allows the monitoring of both future payments and the company’s cash. With Snab you can control the next due debt payments related to Enisa, as well as have full visibility of the principal repayment dates and the capital needs required by the company at the time of amortization.