If you’re evaluating funding options for your startup, at some point you’ll have to answer this question: bank loan or ENISA participative loan? Or both? This is not just a simple choice, it’s a matter of personal risk, financial structure, and credibility with future investors.
At first glance, both a bank loan and an ENISA participative loan are debt that must be repaid. But in practice, they operate under completely different logics, and what may look cheaper on paper can end up being significantly more expensive when you consider the real cost: the guarantees you take on, the monthly cash pressure, and the impact on your future funding rounds.
In this article, we break down both options with the level of detail this decision deserves: what each institution evaluates, the true cost of each instrument, what happens if the company runs into trouble, and at which stage each option makes sense. We’ll also share some practical criteria to help you make the decision based on numbers.
Many founders assume that the nominal interest rate is the only factor to consider when choosing a funding source. But relying solely on that metric is not enough.
Choosing the wrong instrument can lead to:
- Unnecessary personal guarantees. Putting your own assets or your family’s at risk to finance a high-risk project when alternatives without collateral exist (one of the unwritten rules in the startup ecosystem).
- Poorly calibrated cash pressure. Fixed monthly repayments that force you to prioritize “paying the bank” over “growing the business” at a stage where every euro matters.
- Debt that complicates your funding round. Investors do care about the type of debt on your balance sheet. Senior bank debt (which gets repaid before them in downside scenarios) can make a round more expensive or even block it.
- Hidden costs in fees. A 4% nominal rate can turn into a much higher effective rate once you include origination fees, due diligence costs, appraisals, bundled insurance, and early repayment penalties.
This doesn’t mean ENISA is always the better option. It means that a proper comparison involves many more variables than those typically considered at first glance. If you want a full overview of the funding landscape for startups, you can read our article on the Startup Funding Guide 2026 to explore all the options available.
What a bank loan is (and how it works)
A bank loan is a financing agreement in which a private institution (bank, savings bank, or credit cooperative) provides capital in exchange for repayment over fixed installments, including interest and fees. It is senior debt, meaning that in the event of insolvency, the bank gets repaid before almost any other creditor.
The bank’s logic when evaluating your application is conservative by design. It looks at your financial history over the past 2–3 years, leverage and coverage ratios, proven ability to generate cash flow to service the debt, and assets it can seize if you default. For an early-stage startup with no track record, no assets, and still-negative cash flow, this equation rarely works without personal guarantees.
Real cost structure of a bank loan
A loan with a 4.5% nominal rate can end up with a significantly higher effective annual rate once all these costs are included, depending on the deal and the lender. At the early stage, where every percentage point of financial cost competes with product or commercial investment, that difference is far from trivial.
What banks finance is the past. If your company generates predictable cash flow, has assets, or can provide strong guarantees, a bank may lend to you at a nominal rate between 2.5% and 6% depending on your profile and collateral—typically a lower and more predictable cost than ENISA if the business is already profitable. If not, either you won’t get financing, or you will only get it by taking on the risk yourself through personal guarantees.
What is an ENISA participative loan
ENISA (Empresa Nacional de Innovación) is a public institution attached to the Spanish Ministry of Industry, with a specific mandate to finance startups and innovative companies that cannot access conventional bank financing due to lack of collateral, limited track record, or business models with long maturation periods.
Its main instrument is the participative loan, which combines characteristics of debt and quasi-equity. It does not require personal guarantees. It offers grace periods on principal repayment of up to 5 years under the Startups and SMEs line (main program), and up to 7 years in sector-specific lines. During these periods, only quarterly interest is paid, with no principal amortization. Additionally, part of the remuneration is variable and linked to the company’s financial performance: if there are no positive results, the variable component is zero or reduced, although the exact structure depends on the specific program and contract.
From an accounting perspective, ENISA’s subordinated debt is classified close to equity, which improves the company’s perceived solvency for banks and investors. This has direct implications when negotiating future equity rounds.
If you want to assess whether your company meets ENISA criteria, you can read our article on how does ENISA evaluate your viability.
Available programs in 2026
⚠️A key detail that many founders overlook: ENISA requires co-financing and, in many of its programs, equity must be at least equivalent to the loan amount. Specific requirements vary depending on the program and call. If there hasn’t been a recent capital increase to support the application, it is unlikely to be approved.
How ENISA cost is structured
The interest on an ENISA participative loan has two components:
- Fixed tranche: Euribor + 4% or Euribor + 6%, depending on the rating ENISA assigns to the operation. Paid from year one.
- Variable tranche: Linked to the company’s financial performance, with a cap typically between 4.5% and 6.5% depending on the rating. It can be zero or reduced if there are no positive results, although the exact structure depends on the specific program and contract.
This means ENISA financing can be more expensive than a bank loan in scenarios where the company performs very well: the fixed plus variable components can reach 8–12% in high-profitability scenarios, exceeding the cost of a typical bank loan (2.5–6%) if the business performs strongly. This should be reflected in your projections to avoid surprises.
ENISA evaluates potential, but also robustness. It assesses the quality of the team, the strength of the business model, technical feasibility, and the market you are targeting. You don’t need three years of audited accounts, but your financial structure must be balanced and your available accounts properly filed. You need a credible business plan and a team capable of executing it.
Full comparison: ENISA vs bank loan
| Factor | ENISA loan | Bank loan |
|---|---|---|
| Guarantees | No personal or collateral guarantees | Personal guarantees or collateral typically required |
| Type of debt | Subordinated, quasi-equity, VC-friendly | Senior debt, repaid before equity, less attractive in rounds |
| Cost structure | Mixed: fixed (Euribor +4% or +6%) + variable linked to performance (max. 4.5%–6.5%) | Fixed or variable (Euribor + margin) |
| Grace period (principal) | 5 years (Startups & SMEs) / up to 7 years (sector programs) | Typically 6–12 months |
| Total term | 7 years (Startups & SMEs) / up to 9 years (sector programs) | 3–7 years |
| Early repayment | Subject to conditions in the contract | 0.5%–2% fee on outstanding principal |
| Evaluation criteria | Potential, team, business model | Financial history, guarantees, solvency |
| Balance sheet impact | Strengthens equity (quasi-equity) | Increases senior debt, weakens ratios |
| Amount available | €25,000 – €1,500,000 (depending on program) | No fixed limit, depends on guarantees and solvency |
| Time to disbursement | 3–6 months from application | 2–4 weeks with full documentation |
| Ideal profile | Growing startups, pre-round, no guarantees | Companies with stable cash flow, assets, or guarantees |
What happens if the company runs into trouble (possible scenarios)
When does each option make sense
ENISA is the right option when…
- You are in the seed or early growth stage without predictable recurring revenue.
- You don’t have assets or collateral, or you prefer not to risk them in a high-uncertainty project.
- You plan to raise an equity round within the next 12–24 months and want a clean, investor-friendly capital structure.
- You need cash flow flexibility during the product build or commercial validation phase.
- Your model requires time to mature before generating positive cash flow.
A bank loan makes sense when…
- The business generates stable recurring revenue (MRR > €15,000 in SaaS, or consistent B2B sales) with proven ability to cover monthly repayments.
- You have positive EBITDA or are very close to break-even.
- You have assets or corporate guarantees that allow you to negotiate without exposing personal wealth.
- You need urgent funding that cannot wait 3–6 months for the ENISA process.
- You are not planning to raise equity in the short term, and repayments are manageable without putting pressure on cash flow.
Can I combine ENISA with a bank loan?
Yes, and in fact it’s a fairly common structure for startups in the growth stage. The logic is to use ENISA as the first layer of debt (subordinated, unsecured, with a long grace period) and then add bank financing once the business generates enough cash flow to support fixed repayments.
Banks usually view ENISA positively for several reasons: it signals institutional validation, it is subordinated to them in downside scenarios, and it shows you’ve already secured non-dilutive funding. This can strengthen your negotiation position, although the exact impact depends on the lender and the deal.
Recommended strategy if you plan to combine both: apply for ENISA first, wait for approval and disbursement, and then approach the bank with ENISA already in place. Your credit profile improves, and you can negotiate better terms by showing existing public institutional backing.
One practical advice: when you exit the ENISA grace period while also repaying a bank loan, the monthly burden can become significant. During the overlap (years 2–5 with ENISA still in grace), a typical structure might be ~€234/month in ENISA interest plus ~€1,700/month for the bank loan, around €1,934/month in total. Once ENISA exits the grace period (years 6–9), repayments can increase by an additional €1,500–€2,000/month. You should model this carefully before committing to both instruments simultaneously.
How we can help at The Startup CFO
Choosing between ENISA, bank financing, or a combination of both is not an easy decision, and executing it properly is even harder.
At The Startup CFO, we help startups structure their financing with clear criteria: from preparing and managing ENISA applications to defining the optimal debt strategy based on your stage. We analyze your specific case and support you in making the right decision with solid numbers and a long-term perspective.
📞Book a call with us and we’ll get back to you as soon as possible.
