With unemployment reaching record rates almost every month, families losing purchasing power and a dramatic credit crunch for small business, the situation in Spain does not seem very favourable for entrepreneurs and start-ups. In addition, the country has a one of the heaviest process for business creation, with taxes, authorisations and delays that make quite difficult initiate a new company. Is there any hope for entrepreneurs? There are three main challenges that anyone willing to invest in Spain is likely to face:
a) The credit crunch in Spain
Without credit, it is very difficult to imagine that entrepreneurs can innovate. Of course one of the major causes of the economic downturn in Spain was the credit bubble (mostly but not exclusively in the construction sector). But a closer look at the figures from the Spanish Central Bank (Banco de España) reveals that the magnitude of the credit crunch is such that getting a loan to start a business has become impossible for most of the new projects.
Between the end of 2007 and first quarter of 2013, new loans for small and medium (non financial) businesses under 1 million euro have decreased nearly 70%. In comparison, from the beginning of 2003 to the end of 2007 there was an increase of nearly 30%. The correction is going too far, mainly because banks are still dealing with construction bad loans.
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