The endorsements They are financing formulas that help companies to promote their business, or entrepreneurs, to start it up. To reach them, the work of entities such as Avalama mutual guarantee company, whose activity favors the financing of projects for the self-employed and SMEs and that these can, among other things, access public tenders.
The different formulas of guarantees that exist in Spain
The guarantees can be classified according to the nature of the principal guaranteed obligation, its duration or the powers that the beneficiary has against the guarantor.
In the first case, according to the nature of the obligation, We can find three types of guarantees:
- Commercial economic: they are the most common in export and import operations or in housing rentals and are also known under the name of «documentary credits. In these cases, the guarantees of the endorsement would cover the payment of the amounts of the commercial transactions of the endorsed party.
- Economic: the beneficiary receives an amount of money from the guarantor and the guarantor.
- Technical: they are common in contracts between the Public Administration and suppliers, as well as in works contracts. In them, the guarantor responds beyond the amount of money that the guarantor delivers to the beneficiary, certain commitments are also covered, for example, to finish a job with certain conditions.
With respect to duration of the guarantee, can we talk about:
- Determined term, indicated in the text and which, in turn, can be configured as expiration period, with a fixed period after which the effects of the guarantee would automatically expire; Y warranty period, moment in which you can claim the guarantees and obligations arising during the time the guarantee lasted. It is a limitation period, which corresponds to personal obligations.
- Indefinite term, it is extinguished at the same time as the obligation that is guaranteeing.
Regarding the powers that the beneficiary has against the guarantorwe can find endorsements:
- Simple: where the beneficiary must claim the guarantor, in the first place and, if he does not comply, he will have to contact the guarantor.
- Solidarity: the beneficiary can claim both the guarantor and the guarantor. This is a formula that banks often ask for a lot.
- Independent: the guarantor should not ask the beneficiary to claim the guarantor first.
Advantages of guarantees
One of the main advantages is that SMEs can use the financing to improve bargaining power, while reducing your financial cost. There are lines of credit in the market that small businesses cannot access, as they do not meet certain conditions, including economic support and the guarantee to repay the loans.
The guarantees guarantee this support, they add value to the project and the entities that grant it take care to monitor the viability of the operation, minimizing risk.
By having the backing of a guarantee, SMEs can opt for a greater number of financial providers, as well as the conditions under which the loan is signed. This negotiating capacity also extends to access to financing, in the short and medium term.
In the case of public tenders, many small companies are left out to apply for a contract from the Administration, since they usually ask for an indefinite guarantee that they cannot access. The entities that grant guarantees not only advise you regarding the project itself and obtaining financing, but also quickly study the guarantees of the tenders and the possibilities.
Definitely, At a time when SMEs have increasingly difficult access to financing, guarantees can give them many possibilities in this field. There are entities that offer that economic support that some businesses need and allow them to expand the horizon of projects of these companies. In addition, having a guarantee makes financial institutions offer more and better loans to businesses to expand their activity and grow.
