Since the end of March, the Spanish economy has been going through one of the worst periods in its history. The total closure of activity last April, including industry and commerce, has led to a decline in the financial situation for many of the companies that make up the economic fabric of Spain.
Organizations have set to work on their digital transformation and have implemented new work formulas based on flexibility, technology and a “more human” leadership. However, small and medium-sized companies and well as startups have experienced an unprecedented setback, especially in terms of financing.
Companies focused on developing R&D products and supporting their growth–mainly in the funding rounds–have been among the hardest hit. Certainly, some of the large national companies have facilitated access to different aid packages with the aim of solving the economic downturn for startups. Among these is the financial consulting firm Euro-Funding, an entity that was born a quarter of a century ago and has branches all over Spain.
In this scenario, companies are adapting and intensifying their commitment to innovation and, thanks to this evolution, have improved aspects that facilitate their access to the different aids announced, or already available.
These include various recovery and promotion plans, both national and European, in line with the objectives of the Union’s 750 billion Euro rescue plan as a response to Covid19. Of the 140 billion corresponding to Spain, more than 1.5 billion will be mobilized in 2020 as part of the first actions to be carried out under the Next Generation EU Plan.
For example, in the Plan to Boost the Automotive Industry Value Chain, “Reindustrialization 2020” is expected to be published in August with a fund of 1.8 billion Euro for the next two years.
The plan will also include the prompt application of the increase in the tax deduction for technological innovation from 12% to 25% and the forthcoming publication of the Moves Program–which refers to electric and sustainable mobility–as well as other aids to promote training and professional qualifications.
In addition, the Executive will allocate more than 4,200 million Euroto Tourismand the regulatory bases of theProgram for digital transformation and innovation of the sector, endowed with 216 million, have already been published.
With the Shock Plan for Science and Innovation, the CDTI’s budget will double over the next three years and will be supported by a 10 million Euro pilot program this year for SMEs with the EIC Accelerator program’s seal of excellence.
The call for 65 million to support business R&D&I in the aeronautics sector and another 125 million to support business R&D&I in the automotive sector will also be published in the coming months.
Companies also have great opportunities for financing in the Digital Spain plan, which contemplates tackling structural reforms that can mobilize some 70 billion Euro of public and private investment until 2022.
Euro-Funding knows that, despite the existence of numerous calls for public aid, many companies are unaware of their real possibilities for accessing financing or are simply overwhelmed by the administrative procedures required to achieve them.
In this sense, the firm provides public and private entities with “personalized financial solutions that allow the materialization of different financing instruments in a fast and efficient way, according to their financial context: monetization/cash-back, participation of private financial entities, guarantees and endorsements, generation of EIGs or subrogation of credits, among others”, explains Victor Tarruella, Founder and CEO of Euro-Funding in statements to El Referente. Thus, according to the last satisfaction survey carried out by the entity, “nine out of ten of our customers recommend our management and highlight the high specialization of our technical team,” they say.
Which are the aids that may be of most interest to a startup and a SME in terms of national public financing? Do these companies take advantage of public funding instruments for innovation? On the verge of what some analysts already see as the second wave of the Covid-19, or second economic crash, Euro-Funding is promoting a series of measures that are currently boosting the growth and transformation of innovative SMEs. “The Spanish innovation system makes it possible to combine up to four direct and indirect financing instruments so that companies that develop projects can recover part of the investment made in the research, development and testing phases, and even in the process industrialization stage,” explains Euro-Funding.
Under this umbrella, the firm refers to direct and indirect instruments, among which are non-refundable loans and subsidies, both regional, national, or European, for actions that develop innovation projects, industrial investments, business development and sustainability; Social Security bonuses for research personnel dedicated exclusively to innovation projects; tax deductions for R&D that reduce between 12 and 42% of the expenses of the payment of Corporate Tax; as well as the patent Box, which allows a reduced taxation of up to 60% for the assignment of intangibles such as a patent.
Euro-Funding joins forces in Europe
The international scene also adds to one of the target centers for Euro-Funding, especially the Old Continent. Thus, after the European Commission set as a priority “to promote the competitiveness of R&D&I-intensive SMEs in order to accelerate the arrival of highly innovative technologies and products to the market”, the firm has focused its efforts on promoting the different public financing instruments for the development of technologies and products with a high degree of innovation.
Firstly, the EIC Accelerator program, an initiative that focuses on boosting small and medium-sized companies that want to lead their sector in Europe through an idea with innovation and growth potential. EIC Accelerator has a budget of around €654 million and estimates that €100 million will be invested during the pilot phase of the program (2019-2020). “This instrument is one of the most successful in Spain and Europe thanks to its financing conditions: The SME instrument provides non-refundable subsidies of up to 70% of the project budget to SMEs (up to €2.5 million)”, explains Euro-Funding.
A second program is Fast Track to Innovation (FTI) which accelerates the development and market introduction of innovative projects led by multidisciplinary consortia. FTI provides non-refundable subsidies of 70% of the budget to companies and 100% to technology centers or universities. Following this, with a budget of €300 million, the program aims to reward those innovation projects developed in collaboration with between three and five entities, with the participation of the industrial sector being obligatory to ensure rapid assimilation by the market.
Finally, the Eurostars program is another of the support initiatives for R&D-intensive SMEs, focusing on the development of market-oriented transnational projects. Eurostars has a participation of up to 34 European countries that are members of the EUREKA network, and from 2016 it has the collaboration of Canada and South Africa. The budget for this program up to 2020 is €1,150 million, of which 25% corresponds to a contribution from the European Commission, and the remaining 75% corresponds to contributions from the Eurostars countries through their corresponding financial agencies, as is the case with CDTI in the case of Spain. Since 2014, 1199 R&D&I projects have been financed for more than €177 million, with a success rate of 28.5%.