---
title: "Participating Loan (Préstamo Participativo)"
url: "https://www.unknowngravity.com/en/glosario/prestamo-participativo"
site: Unknown Gravity
published: "2026-10-13T19:10:06+00:00"
modified: "2026-10-13T19:10:06+00:00"
language: en-US
description: "A participating loan (préstamo participativo) is a loan whose interest varies with the borrower's business performance and which is repaid after ordinary creditors."
section: "Home > Participating Loan (Préstamo Participativo)"
---

# Participating Loan (Préstamo Participativo)

GLOSSARY · BLOCKCHAIN & WEB3

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](/en/glosario/valor-negociable-tokenizado): 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)](https://www.boe.es/buscar/act.php?id=BOE-A-1996-13002); [Law 6/2023, Article 2 (BOE)](https://www.boe.es/buscar/act.php?id=BOE-A-2023-7053).

*Framework verified as of October 13, 2026.* [Talk to us](/en/meeting).

## 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](https://www.boe.es) and [EUR-Lex](https://eur-lex.europa.eu)).