The Balearic Government will grant profit-participation loans to start-up companies to finance innovative, technology-based projects. Profit-participation loans are a quasi-equity financial instrument that supports investment in emerging companies (startups) that cannot access bank financing.
The aim of this new initiative is to finance technology-based investment projects for companies that lack sufficient initial capital to carry out their business plans and are unable to obtain bank financing. The agreement provides for an initial allocation of €3 million.
Profit-participation loans will contribute to transforming the economic model and creating value. In addition, they will help retain these innovative projects, which, if unable to continue due to lack of financing, might seek support elsewhere. This would result in the loss of both the talent driving these projects and the investments that need to be developed in the territory.
The Balearic Government supports public-private collaboration for the management of this instrument. Accordingly, the Regional Development Agency of the Balearic Islands (ADRBalears) will soon tender for external advisory services to manage the new instrument. Meanwhile, the Directorate General of the Treasury, Financial Policy, and Assets will oversee this process and monitor the operations granted by ADRBalears. Finally, the Directorate General of Innovation and Digital Transformation will be responsible for certifying the innovative nature of the projects.
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