99.7% of all non-financial corporations (NFCs) in Spain in December 2017 were SMEs, employing 63.8% of the business labour force. Of these, micro-enterprises dominated with a share of 89.8% of all enterprises.
The expansion of the Spanish economy continued in 2018. GDP growth was 2.6%, somewhat down on 2017. Growth remained very intensive in employment creation. The slight slowdown observed was in line with expectations, but the composition of GDP was very different: domestic demand continued to be very robust, set against the significant slowdown in exports. Activity and world trade were affected by the tightening of global financial conditions and heightening uncertainty over trade conflicts and the Chinese authorities’ difficulties in redressing this economy’s debt.
After an intense contraction of the SME lending during the financial crisis, the activity and business performance of NFCs in general recovered, in particular those SMEs in particular, which began to grow in 2014, and continued all along the period 2015-2018, as did the improvement in their financing conditions.
Short-term loans, for the first year in the recent period, recorded a reduction as a percentage of total loans. In the case of SMEs, at end-2018, 89.7% of lending was short term, which is a higher share than for large corporations and implies that SMEs are more dependent on credit institutions in the refinancing process than large enterprises.
As regards SME credit conditions, the trend of declining interest rates and interest rate spreads, along with a stabilisation of credit conditions, initiated in 2012, continued. The interest rate spreads between loans to SMEs and large corporates also continued to narrow over the same period, progressively falling from the peak 230 basis points (bp) in 2012 to 20 bp in 2018.
General government financing to non-financial corporations has stabilized in the last 3 years. In particular, financing to SMEs during 2018, showed a very moderate increase. This was, however, compatible with a greater availability of liquid funds and easier credit conditions from private-sector banks, so that SMEs found it easier to access private credit rather than public financing.
The economic recovery and the higher demand, along with improved credit conditions, were also evidenced in lower company mortality (bankruptcies). This was also favoured by various insolvency legislation reforms that have stimulated agreements between creditors and the business continuity.
The latest available information on venture capital investments which relates to 2017, indicates equity financing and the related investments with respect to the seed, start-up and expansion stages in that year (EUR 1 146 million) decreased by 1.2 vis-a-vis 2016.