The "Law for the Promotion of Business Financing" has just been published in the Official State Gazette. It is a rule that encompasses very different rules, with the common purpose of making it easier for companies, especially SMEs, to finance themselves more adequately. As highlighted in the Law, bank financing to companies grew until 2008, but has fallen drastically since then, partly because banks can no longer lend as happily (and we would even say, "lightly") as they did in those days. And partly, too, because banks now have more incentive to contract government securities than to lend to private companies. In this status, Spain is a country in which bank financing to companies accounted for approximately 80 percent of total financing. And as the volume of money that banks are willing to lend decreases, companies cannot find ways to finance their activity. This is one of the reasons why profitable companies are closing down.

The new Law attempts to remedy this status in several ways, of which we will now refer to three at reference letter . Firstly, it requires banks that are going to reduce or cancel financing to business to give at least three months' notice to business so that it can seek alternative financing. In addition, the bank must provide, in a standardized format, information on its financial status and payment history. In this way, if you are a solvent business you will be able to use this information to justify your ability to pay. In addition, companies can also request this information at any status, in order to allow a "benchmarking" of companies' solvency based on objective models.

Secondly, the Law now allows limited liability companies to finance themselves by issuing debentures. The issuance of debentures implies that a business requests a credit from the public, "chopping" it into many mini-credits (each one of them, would be a "debenture"). In this way, from small investors to institutional investors can subscribe to such bonds and provide funds to the issuer. The entity commits to refund the principal, and also to pay interest. In the United States, 70 percent of corporate financing is done by issuing securities to the public. In Spain, limited liability companies, which account for 95 percent of corporate enterprises, could not issue bonds, they could not obtain financing in this way. This is what this Law modifies, which also facilitates and promotes the existence of markets in which these already issued bonds can be sold successively. In this way, the aim is to modify the "dependence" of companies on bank financing.

Thirdly, the Law regulates the so-called "participatory financing platforms", which is what is commonly known as"crowdfunding". This is a novel technique consisting of requesting, usually through a website, many small contributions from third parties to finance a business project , a association, or any other purpose (it has even been used for political parties). Within this phenomenon, the Law regulates companies that place on contact (through web pages or other electronic media) companies or individuals who need financing for specific projects, and investors who would be willing to finance such projects. These investors assume the risk of losing the investment, but also the possibility of making a profit if the project generates profits. The Law does not regulate the cases in which the contribution of the "investor" is made as a donation, or as a loan without interest. That is, when a family member or friend gives money or lends financial aid disinterestedly to the project business of another, this will not be governed by this Law. What is intended by rule is that companies created to put projects and investors for profit on contact are controlled, and also adequately inform investors of the risk involved in the investment, and the possibility of losing their money.

When assessing whether this Law makes sense, it is worth making some preliminary clarifications. If the problem is really that companies depend too much on bank financing, it should not be forgotten that financing by close relatives or partners of the entity has been greatly penalized when the financed party goes bankrupt, since then the relative or partner will only be paid if the other creditors "unrelated" to the debtor are paid in full. They are treated almost like criminals. And if the legislator considers that banks lend little to companies, it should not be forgotten that the State's own financing policy, and other economic policy measures in the Eurozone, have taken away a lot of money that could otherwise have been used to finance companies. At final, time will tell whether all these novelties, and others contained in the Law (a new regulation of the revaluation by mutual guarantee companies, securitization funds, financial establishments of credit , etc.), really help companies to finance themselves better than they have been able to do so far. But it seems that the legislator is walking without a very clear direction: on the one hand, he is strangling ways of raising funds, and on the other, he is proposing various measures to see if, almost by chance, he can find the key to reactivate the financing of companies.