The application deadline for ICO guarantees and the terms of business loans have been extended by law
Madrid – In view of the tense economic situation, which threatens the existence of countless companies and self-employed, the government is trying to banish the specter of expected mass bankruptcies until the situation normalizes. In doing so, she benefits from the financial aid from Brussels, which enables the public sector to bring liquidity into the economy.
With this in mind, the Council of Ministers passed a statutory ordinance in mid-November which extended the possibility of applying for state-guaranteed loans until mid-2021 and obliges the banks to extend the loan repayment periods by up to three years and the waiting period to up to 24 months.
The banks are not allowed to make the granting of business loans, for which the state credit institute ICO guarantees, subject to conditions such as the simultaneous conclusion of further banking products, nor are they allowed to raise interest rates.
Economy Minister Nadia Calviño said: “The point is to help those projects that were healthy before the outbreak of the corona crisis and are experiencing temporary liquidity problems.”
According to Finance Minister María Jesús Montero, the extension of the deadlines will give many companies that would otherwise be doomed the freedom they need to weather the difficult times.
The government has so far issued two major lines of government-guaranteed loans. A first of 100 billion euros in March of this year and a second of 40 billion euros specifically for digitization and the environmentally friendly economy. The demand is great. To date, guarantees totaling 82 billion euros have been granted in a total of 881,000 loan operations. 98% went to small and medium-sized companies and the self-employed.
The ICO fears that some of these loans will never be paid back. That is why it was equipped with a new instrument to be able to collect debts. It has access to the risk information center of the Spanish central bank Cirbe in order to find out whether defaulting debtors have funds in other banks.
Another government measure against the impending mass bankruptcies is the renewed postponement of the deadline after which the suspension of the obligation to notify a company ends: from December 31, 2020 to March 14, 2021.
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