The Council of Ministers has approved this Friday the royal decree-law of urgent measures to guarantee the solvency of companies endowed with a total of 11,000 million, which will include a fund of 7,000 million euros in direct aid, of which 2,000 are only for the Canary Islands and the Balearic Islands, the two communities most affected by the pandemic due to the greater weight of tourism.
This was stated by the Third Vice-President and Minister of Economic Affairs, Nadia Calviño, at the end of the extraordinary meeting of the Council of Ministers, who specified that these 7,000 million can be used to pay fixed expenses, debts to suppliers and payment to other financial and non-financial creditors, to prevent corporate over-indebtedness from hindering recovery.
Of this total amount, 2,000 million will be allocated exclusively to the Canary Islands and the Balearic Islands, as they are the most affected by the pandemic, and the rest, 5,000 million, will go to the other autonomous communities and cities.
30% drop in turnover
Specifically, the first fund of 7,000 million, which will be managed by the autonomous communities, are non-refundable direct aid of a specific nature, which can be used to pay debt incurred since March 2020, both related to suppliers, as well as to pay fixed expenses, supplies, salaries, rents or reduction of financial or non-financial debt, provided that the drop in turnover is at least 30% compared to 2019.
The Tax Agency will be the entity in charge of providing information to the communities to know if the applicant company meets the requirements to access the aid and a platform will be made available to the autonomous communities for this purpose, as explained by the Minister of Finance, María Jesús Montero.
Calviño clarified that SMEs and self-employed workers from 100 different economic activities, such as manufacturing industry activities related to commerce and hospitality; wholesale and retail trade; transport auxiliary sectors; aeronautical maintenance, and activities related to culture and sports activities, may be eligible for the measures.
This aid may compensate, at most, 40% of the additional drop in income in the case of micro-enterprises and self-employed workers (up to 10 employees), and up to 20% for the rest of companies.
Specifically, self-employed workers who pay taxes in modules will receive up to 3,000 euros and between 4,000 and 200,000 euros the rest of self-employed workers and companies, amounts that may be increased both in the Canary Islands and the Balearic Islands, always within the limits of State aid set by Brussels.
The receipt of all this aid will be conditional on the recipient companies maintaining their activity until June 2022, not having their domicile in a tax haven, not being in bankruptcy or having ceased activity at the time of application, being up to date with payments of tax obligations and Social Security and not distributing dividends or increasing the salaries of their management team for a period of two years.
The communities will have the funds in 40 days
According to the Government spokesperson and Minister of Finance, María Jesús Montero, the autonomous communities will receive the transfer of these funds within a maximum period of one month and ten days, after signing an agreement, although the order stipulating the amount that will correspond to each of the regions is pending publication and will be approved in the coming days.
The allocation of funds will be made following the same criteria as those used for the 'React EU' fund, which are based on the impact of the pandemic on the wealth of the community, the impact of the crisis on unemployment and the impact on youth unemployment, all governed by data updated to December 2020.
3,000 million to restructure Covid financial debt
This second line of action includes a set of measures to support and flexibilize loans with public guarantee, thus allowing the ICO to join the refinancing and restructuring processes agreed by banks and their clients, also protecting financial stability. This axis is supported by the creation of a new line for the restructuring of financial debt with State guarantee, endowed with 3,000 million euros.
Based on the analysis of the client made by the financial institution, measures may be agreed to, firstly, extend the maturity period of loans with public guarantee for an additional period; secondly, convert loans with public guarantee into participating loans, a measure that will strengthen the equity of the beneficiary companies by having these loans a treatment equivalent to capital for commercial purposes.
As a last resort in this area, direct aid is allowed to reduce the financing with public guarantee requested during the pandemic.
Quitas in loans with banking aid
The aid may be allocated to companies that meet the eligibility criteria that will be established by a subsequent Agreement of the Council of Ministers and within a renegotiation process agreed by customers with financial institutions, which will assume the proportional part of the loan reduction.
For the articulation of these measures, a Code of Good Practices will be approved, of voluntary adhesion by financial institutions and other organizations, similar to the existing one in the mortgage field, whose objective is to favor a coordinated and efficient action of banks in support of viable companies with specific solvency problems.
Is
Thirdly, a recapitalization fund has been created for medium-sized companies affected by the crisis, aimed at strengthening the balance sheets of companies that were viable in December 2019, but are facing solvency problems due to the pandemic.
This fund is endowed with 1,000 million euros and will be managed by Cofides, a company with public-private capital. The aid will be made in the form of financial instruments, such as ordinary loans, participating loans, capital or others to companies that are going through temporary difficulties and that cannot access the aid from the 10,000 million support fund for strategic companies, managed by Sociedad Estatal de Participaciones Industriales (SEPI).
Calviño stressed that the new package of aid, together with those previously approved, represent a fiscal effort of direct aid "unprecedented" to protect the productive fabric, employment and health that exceeds 2% of GDP. This is in addition to those adopted in 2020, with a mobilization of 20% of GDP, which places the Spanish response among "the highest in the EU countries".
