FINANCIAL INSTITUTIONS MUST INFORM INSURANCE LINKED TO FINANCING SMES

FINANCIAL INSTITUTIONS MUST INFORM INSURANCE LINKED TO FINANCING SMES

Until not long ago, a financial institution could deny the renewal of a credit account at the time of the renewal to an SME or an autonomous, and remain so wide. That, in addition to assume a real headache (to see what you do now), involves an additional question: what's with that credit-related insurance?

On December 11 the Bank of Spain published the draft Circular which forced financial institutions - Spanish foreign-operating in Spain to inform its accredited on their financial situation, credit history, summary of movements and its risk rating. This circular is the development of the law 5/2015, of 27 April, promotion of the financing business, applicable to SMEs and freelancers.

This law requires credit institutions to give notice when they have intention not to extend, extinguish or reduce by 35% or more the flow of funding granted to an SME. This notification should be sent at least 3 months of the date of expiration of the larger credit agreement. 

This notice must be accompanied by an obligation to the credit institution provided free of charge to SMEs information about your financial situation and payment using the "Information financial - SME" document history.

The draft Circular published by the Bank of Spain for his establish the content and format of the document "SMEs financial information" indicating that law.

INSURANCE LINKED TO FUNDING INFORMATION

ADECOSE, the Spanish Association of insurance brokers, reported that it considers appropriate to text draft Circular with regards to the relationship of insurance linked to the flow of financing contracts.

This information will allow SMEs and self-employed have sufficient time to adjust their cash management and start searching for alternative sources of funding. 

This will also allow them to cancel insurance contracts linked to the loan or credit to produce the reduction or cancellation of the loan. This will undoubtedly favour transparency in the relations of SMEs with the financial institutions.