25 Mar COVID-19: The first line of guarantees to ensure the liquidity of the self-employed workers and companies has been approved by the Council of Ministers.
Following the approval of the Royal Decree-law 8/2020, of 17 March, yesterday, 24 March, the Council of Ministers approved the first section of the line of guarantees included in the Royal Decree-law for an amount of 20 billion euros. This first tranche of guarantees is intended to guarantee loans and renewals granted to cover the liquidity needs of self-employed workers and companies.
As we announced in our last publication concerning the main economic measures approved by the Royal Decree-law 8/2020, of 17 March, the Spanish government approved the granting of guarantees for a maximum amount of 100 billion euros for financing granted by credit institutions.
In development of such measure, the Council of Ministers held yesterday, 24 March 2020, approved an agreement that includes the characteristics of the first tranche of these guarantees, amounting to 20 billion euros, of which 50% will be reserved to guarantee loans to the self-employed workers and SMEs.
This new line of guarantees, which will be managed by the Official Credit Institute (”Instituto de Crédito Oficial” – ICO) in collaboration with financial institutions, will guarantee new loans and renewals granted by financial institutions to companies and self-employed workers to cover financing needs arising, among other things, from the payment of salaries, invoices, working capital requirements or other liquidity needs, including those arising from the maturity of financial or tax obligations.
Companies and self-employed workers affected by the economic effects of COVID-19 may request these guarantees, provided that they were not in a default situation as of 31 December 2019 and in insolvency proceedings on 17 March 2020.
The guarantee will cover 80% of new loans and renewals of operations requested by self-employed workers and SMEs and 70% of new loans granted and 60% of renewals for the rest of companies. It will have a term equal to the term of the loan granted, with a maximum term of five years.
These guarantees may be requested until 30 September 2020, which will be retroactive and may be requested for operations formalised after the entry into force of Royal Decree-law 8/2020 on 18 March.
For their part, financial institutions undertake to maintain the costs of new loans and renewals benefiting from these guarantees at the levels applied before the start of the health crisis, and to maintain the limits of the credit lines granted to customers.
ICO has not yet published any further information on its website, so we hope that in the coming days the specific requirements to apply for this first tranche of guarantees will be defined, as well as further information concerning the Credit Lines to be granted by the ICO and also approved by the Spanish government in the Royal Decree-law 8/2020.
If you have any doubts or queries about the measures adopted by the Spanish government, you can contact us at firstname.lastname@example.org