The Government activates the third tranche of the Guarantee Line to guarantee liquidity and strengthen corporate financing
04/05/2020
The Council of Ministers today approved the agreement to activate the third section of the Guarantee Line to guarantee the liquidity of companies and self-employed workers approved by the Government on March 17 for a total amount of 100,000 million euros.
May 5, 2020. The Council of Ministers today approved the agreement to activate the third section of the Guarantee Line to guarantee the liquidity of companies and self-employed workers approved by the Government on March 17 for a total amount of 100,000 million euros.
Under this new tranche, 20 billion will be allocated to guarantee loans from self-employed workers, SMEs and large companies; 4 billion to cover promissory notes from the Alternative Fixed Income Market (MARF) and 500 million to reinforce the reavales granted by the Spanish Reinvigoration Company (CERSA).
The approval by the Council of Ministers makes it possible to continue strengthening corporate financing to preserve activity and employment, maintaining the sources of liquidity of companies and those provided by capital markets, and increasing the capacity of the reciprocal guarantee societies of the autonomous communities.
The agreement specifically establishes that companies must use the guaranteed financing to meet the liquidity needs derived, among others, from the management of invoices, payment of payroll and suppliers, need for circulation and maturities of financial or tax obligations, without being able, in any case, to pay dividends or dividends on account.
20,000 million for freelancers, SMEs and companies
The financing for the coverage of loans granted to self-employed persons and companies maintains the same characteristics and the same procedure for processing the initial tranches. Of the 20 billion activated, 10 billion are reserved to guarantee loans from self-employed workers and SMEs and the other 10 billion to guarantee loans from the rest of the larger companies.
Self-employed workers, SMEs and companies affected by the economic effects of COVID-19 may apply for these guarantees, provided that the applicants were not in a delinquent situation on December 31, 2019 or in insolvency proceedings on March 17, 2020 and are not in a crisis situation according to European Union regulations.
The guarantee guarantees 80% of the new loans and renovations of operations requested by self-employed workers and SMEs. For the rest of the companies, 70% of the new financing granted is guaranteed and 60% in the case of renovation operations. The guarantees will be valid equal to the term of the loan granted, with a maximum of five years.
The agreement of the Council of Ministers strengthens and clarifies the characteristics for the beneficiaries. For this purpose, the prohibition of financial institutions being able to charge any financial cost or expense on amounts not provided by the client is expressly included. The entities must comply with all the requirements established in the agreements and in the framework contract with the ICO, and it is recalled that material breaches of their obligations are considered a disciplinary infringement.
4,000 million to guarantee emissions of promissory notes
The Council of Ministers has also approved an additional EUR 4 billion from the ICO guarantee line to guarantee emissions from non-financial companies from the Alternative Fixed Income Market (MARF). Companies with a registered office in Spain and which have a promissory note program incorporated into the MARF before the entry into force of Royal Decree-Law 15/2020 of 21 April, will be eligible for these guarantees, provided that they are not in a crisis situation according to European Union regulations and that promissory notes are issued before 30 September 2020.
The maximum amount of the guarantee will be 70% of the principal of each of the emissions and the maximum period of 24 months. The cost will be 30 basis points for vouchers with a maturity of up to 12 months and 60 basis points for vouchers with a maturity of between 13 and 24 months.
The management of these guarantees will be carried out by the ICO in collaboration with Spanish Stock Exchanges and Markets (BME). Both institutions must sign a framework contract with each non-financial company that wants to benefit from the guarantee for its promissory notes issuance and with the placement entities participating in the promissory notes issuance program.
500 million to strengthen CERSA's endorsements
In addition, 500 million have been approved to strengthen the guarantees granted by the Spanish Company of Reconsolidation (CERSA) and increase the capacity of the Reciprocal Guarantee Societies of the Autonomous Communities.
The maximum guarantee will be 80%, although it may vary in each operation to complement the guarantee that the European Investment Fund (EIF) also grants to CERSA, without both guarantees being able to jointly exceed 90%.
The maximum term of the guarantee will be five years. For the management of the guarantees, the Ministry of Economic Affairs and Digital Transformation will sign a framework contract with CERSA.
Companies have already received more than 36,000 million euros in financing
With the latest data available, until Sunday, May 3, Spanish companies have received 36.190 billion euros in financing through the Guarantee Line. They have benefited from the same 269,843 companies, which have received guarantees amounting to 27,510 million euros.
Of the total operations, 98% correspond to new loans and renovations of self-employed and SMEs, with 264,862 operations endorsed, amounting to 18,998 million euros. These guarantees have allowed funding to flow for more than 23,773 million euros.
In addition, 4,981 operations of large companies, amounting to 8,511 million euros, have been guaranteed, which have allowed them to obtain financing of more than 12.4 billion euros.