Latest measures to support the liquidity and solvency of companies and freelancers affected by COVID

Latest measures to support the liquidity and solvency of companies and freelancers affected by COVID

liquidity and solvency of companies new government measures

The Government approved new aid to companies at the end of 2020. Among them, a new package of urgent measures in support of the liquidity and solvency of companies and the self-employed, approved on November 17 by the Council of Ministers.

New measures on the lines of financing guaranteed through the ICO

To this end, they had already offered:

100 billion euros (approved in Royal Decree-Law 8/2020) for loans, credits and other financing models formalized or renewed as of March 18, 2020 and until December 1, 2020.

40 billion euros (approved in Royal Decree-Law 25/2020) for loans, credits and other financing models formalized from July 29, 2020 until December 1, 2020.

The terms of the operations and the guarantee would be up to a maximum of 5 and 8 years, respectively.

What are the new measures to support the liquidity and solvency of companies in relation to loans and operations guaranteed through the ICO?

  1. The period for requesting guarantees under the two aforementioned lines is extended until June 1, 2021.
  2. Companies or freelancers that already have the help of the line approved by Royal Decree-Law 8/2020 and meet certain requirements, may request the financial institution, before May 15, 2021:

Extend the expiration date of guaranteed operations by a maximum of three years. The total maturity of the operation will not exceed 8 years from the date of signature.

The public aid granted will be extended for the same period

  1. The grace period is extended to a maximum period of 12 months. The total duration of the same will not exceed 24 months from the date of formalization of the operation. This may be applicable to both the respective agreement to RD-law 8/2020 and RD-law 25/2020.

The limits of the working capital lines that companies and freelancers had granted must be maintained until June 30, 2021. The application of this measure can only be requested if, in the same way, one of the above has also been requested.

Requirements to be met by companies and self-employed applicants for support measures

The following requirements are established:

Not be in default (non-payment of more than 90 days) in any of the financing operations granted by the entity.

Not appear in a situation of delinquency in the CIRBE on the date on which the extension or extension requested is formalized.

Not be subject to any bankruptcy procedure.

That the financial institution has not notified the ICO of any non-payment of the guaranteed operation on the date on which the extension or extension is formalized.

Having formalized the guaranteed operation before November 18, 2020 in order to apply the extension of the expiration period or the grace period.

Regarding the extension of the guarantee period, the limits established by the State aid regulations of the European Union must be respected.

Obligations of financial entities upon receipt of applications

Apply the requested measure within a maximum period of 30 days.

Maintaining the cost of the financed operation, without the fact of extending the maturity period, extending the grace period or the duration of the limit of the working capital lines increasing the interest rate, commissions, etc. Only in the event that with the extension or extension there is an increase in the cost of the guarantee, the entities will be able to reflect that increase by increasing the cost of the guaranteed operation.

Do not condition the granting of the requested measures to the contracting of other products of the entity.

Apply the best banking uses and practices for the benefit of customers.

In the event of disagreement with the actions of the financial entities in relation to these obligations, a claim may be filed with the Bank of Spain. They will follow the same procedure as the rest of the claims received.

New tranches of the line of guarantees for investment and liquidity

The Government has released two new tranches of the line of guarantees for investment and liquidity that may be requested until June 1, 2021:

From the line of guarantees for liquidity of the ICO COVID-19, endowed with 500 million euros and up to a 90% guarantee for operations of freelancers and SMEs in the tourism sector, hospitality and related activities. In addition, other measures are approved for the sector in the financial field

From the line of guarantees for investment and liquidity, destined to reappraise the operations of the Spanish Re-guarantee Company (CERSA). It has an endowment of 500 million euros and will allow to increase the guarantee capacity of the Reciprocal Guarantee Companies. Its great capillarity and presence in all autonomous communities will reinforce access to finance for SMEs .

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