COVID-19: Extraordinary measures to support business solvency.
On 12 March, a raft of support measures for firms and the self-employed, amounting to €11 billion, were approved to address the impact of COVID-19.
These measures were geared to protect viable firms whose income has fallen sharply owing to the persistent reduction in activity prompted by the pandemic.
The measures are divided into four lines of action:
- COVID-19 direct assistance facility for firms and the self-employed, to service debt arranged from March 2020 and to make payments to suppliers and other financial and non-financial creditors, as well as to cover the fixed costs incurred as of that date. This assistance is aimed at firms and the self-employed with registered office in Spain whose annual turnover in 2020 fell by at least 30% as compared with 2019 and that operate in certain sectors.
- Flexibility for loans with public guarantees. This flexibility allows such financing to be included in forbearance procedures agreed between banks and their customers. Exceptionally, and as a last resort, the flexibility allows for the possibility of a reduction in the principal of the guaranteed loan. The eligibility criteria for this facility will be established by agreement of the Council of Ministers, which will also develop a Code of Good Practice aimed at ensuring that debt renegotiations focus on shoring up the viability of the firm or self-employed worker in question.
- Recapitalisation fund for firms. This fund will provide public resources to viable firms experiencing solvency problems on account of COVID-19 and that need additional capital support following application of the measures described above.
- Other measures are also included, such as the extension of the moratoria for the automatic triggering of insolvency proceedings and the extension of the deadline for repayment of public loans managed by the Spanish General Secretariat for Industry and SMEs.
This raft of measures is regulated under Royal Decree-Law 5/2021 of 12 March 2021, on extraordinary measures to support business solvency in response to the COVID-19 pandemic. Click the following link for further details (in Spanish).