Almost every small business needs money before it makes any: the van, the premises, the stock, those first months when you invoice little and pay a lot. And the first reflex is usually to walk into your usual bank and ask for "a loan", without really knowing what else exists or what fits your situation.
My rule, which I also apply to personal debt: debt only makes sense if what you buy with it earns you more than it costs. A machine that lets you double your sales, yes. Covering monthly losses with credit, almost never.
First: what's the money for?
Financing a long-term investment (equipment, refitting the premises) is not the same as covering a cash-flow gap (your clients pay at 60 days, your suppliers want paying at 30). The first fits a multi-year loan; the second, a credit line or factoring. Using a 5-year loan for a two-month liquidity problem means paying interest you didn't need to.
The options, one by one
Bank loan. The classic: you get a lump sum and repay it in instalments. Look at the APR (TAE), not just the nominal rate (TIN); I explained the difference between TIN and TAE. Above all, look at the guarantees. As a sole trader you're liable with everything you own, and even with a limited company the bank will almost always ask for a personal guarantee. Read it twice.
ICO credit lines. Spain's official credit institute (ICO) usually doesn't lend to you directly: it provides funds that banks distribute on slightly better terms than their usual catalogue. You apply at your own bank, and the bank still decides whether to approve it.
SGR guarantees. If the problem is that the bank doesn't trust you, a mutual guarantee society (Sociedad de Garantía Recíproca) can guarantee you to the bank. You become a member (buying a small stake you get back at the end) and pay a fee for the guarantee. In return you get loans you wouldn't get on your own, sometimes over longer terms.
ENISA. Public participative loans for innovative or growing SMEs: no collateral or guarantors, with an interest rate that has a fixed part and a variable part tied to how the company performs. The catch: they usually require a company (not a sole trader) and own funds roughly in proportion to what you ask for.
Cashing out unemployment benefit. If you have unemployment benefit left and register as self-employed, you can ask to receive it as a lump sum (pago único) to invest in the business or to cover your social security contributions. It's your money with no interest, so check this before anything else.
Leasing and renting. For vehicles and equipment. With leasing you pay instalments with an option to buy at the end; with renting you pay to use it, maintenance included, and hand it back. Both have tax advantages because the instalments are usually deductible, but run the full numbers rather than trusting the sales pitch.
Factoring and confirming. Factoring advances payment on your invoices for a fee (if it's "without recourse", the provider takes the risk of non-payment). Confirming is the same from the payer's side. Useful if you have big clients who pay late.
Credit line. An available balance you draw on when needed. You pay interest only on what you use, plus a fee on the unused part. Ideal for seasonal businesses.
Microcredit, crowdlending and business angels. For small projects without collateral there are microloans from social lenders; crowdlending connects your company with private investors; and business angels put in money in exchange for a share of the company. Each has its niche, but none of it is free money.
Run the numbers before signing
Quick example: you borrow €30,000 over 5 years at 8% for a machine. The payment comes to about €608 a month and you'll pay roughly €6,500 in interest overall. If the machine brings in an extra €1,000 profit a month, great. If it brings €500, you're losing money every month even though the business looks like it's growing.
For those sums there's the personal loan calculator and the break-even calculator, which tells you how much you need to sell to cover costs (loan payments included).
And a tip you won't find in any brochure: get offers from several lenders at once. Terms for the same business can vary enormously between them, and your lifelong bank isn't always the one that treats you best.