Abstract
This paper analyses the effect of bank relationships on the interest rate and personal and real guarantees borne by a sample of small and medium-sized enterprises in their indebtedness. The results of this paper indicate that the SMEs that work with fewer financial intermediaries obtain debt at a lower cost. This reflects that the advantages linked to debt concentration are greater than the disadvantages. Additionally, financial institutions show a clear tendency towards raising the use of personal guarantees as the relationship progresses and the these become better known. Likewise, the companies that go into debt with banks instead of with savings banks bear higher interest rates and real guarantees. Finally, the companies that have a more intense relationship of trust with their lender obtain loans at a lower cost, but supplying more real guarantees.
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