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GLOSSARY · BLOCKCHAIN & WEB3

Participating Loan (Préstamo Participativo)

What a participating loan is under Article 20 of Spain's Royal Decree-Law 7/1996: interest tied to performance, subordination and effect on equity.

WHAT IS IT? · FOR DUMMIES

A participating loan is a loan to a company where part of the interest depends on how the business does: if it does better, it pays more. In exchange, if the company goes into insolvency proceedings, the lender is paid after ordinary creditors.

WHAT IS IT? · PRO

A participating loan (préstamo participativo) is a loan whose interest varies with the borrower's business performance and which is repaid after ordinary creditors. In Spain it is governed by Article 20(1) of Royal Decree-Law 7/1996, which gives it four features: variable interest tied to net profit, revenue, total assets or another agreed criterion, to which fixed interest may be added (point (a)); early repayment allowed only if offset by an equity increase of the same amount (point (b)); a place in the ranking of claims behind ordinary creditors (point (c)); and treatment as equity for the purposes of capital reductions and the liquidation of companies (point (d)).

In a tokenized offering, a token can record the lender's position and automate interest payments, but that alone does not turn the loan into a transferable security: that depends on its legal structure and transfer regime (Article 2(1)(a) of Law 6/2023).

Official sources: Royal Decree-Law 7/1996, Article 20 (BOE); Law 6/2023, Article 2 (BOE).

Framework verified as of October 13, 2026. Talk to us.

01 / Key points

  • It is governed by Article 20 of Royal Decree-Law 7/1996
  • Variable interest tied to the borrower's performance, with optional fixed interest
  • It ranks behind ordinary creditors and counts as equity for capital reductions and liquidation
  • Tokenizing it is not enough to make it a transferable security

02 / Advantages

  • Counts as equity for capital reductions and liquidation, without bringing in new shareholders
  • Cost tied to performance: the variable part falls if the business does worse, under the agreed criterion
  • Share in success: the lender earns more if the business does well

03 / Disadvantages

  • Subordination: the lender is paid after ordinary creditors
  • Rigid exit: repaying it early requires an equity increase of the same amount
  • Uncertain return: the variable part can be low or zero in bad years

This entry is informative. It is not legal, tax or investment advice. The rules cited change: check the current version in each country’s official gazette (for Spain and the EU, BOE and EUR-Lex).