Financing of up to 12.5 million euros
ICO loans are lines of funding intended for companies and the self-employed to cover investment or liquidity needs. Although they have funds and framework conditions set by the Official Credit Institute, it is private banks that analyze the risk and decide on final approval.
The main difference compared to an ordinary bank loan is the repayment and grace periods, which are much longer and more favorable: financing can reach up to 12.5 million euros, with repayment periods of up to 20 years and grace periods that can last up to several years depending on the destination of the loan, which significantly alleviates pressure on the company's treasury during the first few years.
Guarantees and fees depend on each bank, always within the limits established by the ICO, which acts as a public bank to promote business development in Spain.
Beneficiaries
ICO loans are designed to provide accessible funding to a wide range of business profiles. Spanish companies of any size, from SMEs to large corporations, can apply for them as freelancers who need liquidity or want to undertake productive investments.
In addition, certain lines also allow access to public and private entities, as well as to communities of owners, especially within the ICO Business and Entrepreneurs line, aimed at promoting rehabilitation and improvement actions.
Another important advantage is that some modalities include the participation of foreign companies that are active in Spain or that maintain commercial relations with Spanish companies, which makes ICO lines a useful instrument for internationalization, export or cross-border business collaboration projects.
Available lines of funding from the Official Credit Institute (ICO)
The ICO offers different lines of financing to meet different needs: from investment, liquidity and working capital, to internationalization, export or business growth projects.
- ICO Companies and Entrepreneurs: This line is aimed at companies and freelancers who need to finance investments or have liquidity. It can be used for asset acquisition, machinery purchases, digitalization, rehabilitation, working capital or any business need. The financing covers up to 100% of the needs, with different modalities — loan, leasing, renting or line of credit — and, the most interesting thing about the aid, repayment periods of 1 to 20 years, with the possibility of grace period.
- ICO Growth: ICO Growth is the first 100% digital direct financing tool of the ICO, aimed especially at Spanish SMEs with higher risk profiles: for example, with strong investment in intangible assets, indebtedness or the need for structural capital, which have difficulties accessing traditional credit. Its objective is to facilitate investment, expansion or renewal of the company under favorable conditions.
- ICO MRR Companies and Entrepreneurs: Framed within the Recovery, Transformation and Resilience Plan (PRTR) and financed with European funds (Next Generation EU), this line seeks to promote the recovery, transformation and growth of companies and the self-employed. It is designed to finance productive investments, modernization, digitalization, innovation or structural improvement projects. It can finance up to 100% of the cost of the project (excluding VAT), and is open to all types of private and independent companies with a Spanish interest.
- ICO SGR/SAECA Guarantee: Designed for companies, freelancers or entities that have the guarantee of a mutual guarantee company (SGR) or the state agrarian company SAECA. It offers total financing for needs (up to 100%), either for investment or liquidity, under loan, leasing, renting or line of credit modalities. It's especially useful when collateral is available, reducing the need for additional collateral. Normal repayment period of 1 to 15 years, with the possibility of a grace period.
- ICO Trade Credit: Aimed at companies and the self-employed who need liquidity through the advance of outstanding invoices, that is, working capital funding. It allows you to anticipate expected revenues, improving cash flow without having to wait for customers to pay. This line is aimed at urgent liquidity needs derived from operating activity.
ICO Exporters: Especially designed for companies or freelancers with an export activity. It makes it possible to obtain liquidity through the advance of invoices derived from foreign trade or to finance the production costs of goods and services destined for the international market. It is a useful tool for dealing with long collection periods for exports or for covering costs prior to production.
- International ICO: Aimed at companies that operate outside of Spain or those that need to finance international trade operations. It facilitates the internationalization of the company, either through investments abroad or the financing of cross-border business operations. It covers needs associated with international expansion or import/export of goods and services.
How do ICO loans work?
ICO loans are one of the most used financing tools by companies and the self-employed, but their operation raises doubts because they combine public conditions with private banking evaluation.
Although the Official Credit Institute establishes the general limits (maximum amount that can be financed, available terms and framework conditions), the granting of the loan always depends on the financial institution, which performs its own risk analysis before approving the transaction. For this reason, the same project can be approved in one bank and rejected in another, making it essential to prepare a solid file that meets current financial criteria.
Although ICO loans do not include study or opening fees, they can apply early repayment fees in the event of total or partial cancellation, just like other banking products.
The maximum funding is usually up to 12.5 million euros per customer per year, and repayment periods can reach up to 20 years, with a minimum of one year and the possibility of grace period depending on the line and destination of the funds.
Interest rates can be formalized at fixed or variable rates, but they are always calculated by adding the reference rate established by ICO and the margin applied by the financial institution, which varies depending on the perceived risk, the applicant's credit quality and the chosen repayment period. This explains why two banks can offer different conditions under the same ICO line.
How to apply for an ICO loan?
To apply for an ICO loan, the first step is to go to a collaborating entity, since these loans are not managed directly with the ICO, but through authorized banks and financial institutions. Once the entity has been selected, you must explain your project or need for funding and submit a report that justifies the destination of the funds, the economic viability and the current situation of your company or activity.
If the loan is intended for productive investment, it is common for them to ask for a report or business plan that explains the project, its viability and its potential for return.
Along with this report, the bank will request the necessary financial documentation to evaluate your ability to pay, such as balance sheets, income statements, tax returns or the CIRBE report, which shows the level of indebtedness to the financial system. If the application is approved, the signing of the loan is formalized under the agreed conditions and, after signing, the capital is disbursed so that you can use it for investment or liquidity depending on the purpose of the financing.
Expert Advice: To increase the chances of approval, it is advisable to prepare a solid memory, favorable financial ratios and justify the return on investment.
