Editor’s note: This article was first published in April 2013, when the measures it describes were part of a bill still being drafted. Spain’s Entrepreneurs Act was passed later in 2013 (Law 14/2013), and its final text differed in several respects.
Until now, the main obstacle for an entrepreneur in Spain has been bureaucratic red tape, where the process can drag on forever. The new Entrepreneurs Act (Ley de Emprendedores) could be ready in the coming weeks.
With the new reform for entrepreneurs, the plan is for them to be able to set up a company in just 24 hours at a cost of 40 euros, and to do it online, thanks to the CIRCE computer system, which will take care of speeding up the paperwork needed to set up a company.
The new reform would also include the option of creating companies with share capital of just 1 euro, instead of the 3,006 euros required until now.
The next problem in need of a solution would be credit. In addition to the tax incentives and exemptions the law plans to include for the start of business activity, the Government intends to create a promissory-note market where small and medium-sized enterprises can obtain financing.
In addition, to prevent entrepreneurship from becoming an activity in which you risk losing your home, the home of self-employed people will be shielded, so that it cannot be seized for business debts owed to suppliers.
The future law also plans to boost venture capital firms and mutual guarantee companies (SGRs, Spanish societies that guarantee loans to small businesses), and even provides for the creation of mixed public-private venture capital funds.
Changes are also planned to the guarantees or sureties an entrepreneur needs to obtain a loan: it would no longer be necessary to put up your property as collateral, but rather the future profits of the business. In other words, an entrepreneur working in agriculture will be able to offer their future harvest as collateral, while taxi drivers and pharmacists will be able to use just their licence as security.
The planned reforms for entrepreneurs are being well received, although for now they are only theory and we would need to see them in practice. Still, if it turns out as proposed, it sounds pretty good.
Further reading
Featured image: seisdeagosto from Spain, CC BY-SA 2.0, via Wikimedia Commons.
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