The Government activates a new section of the Guarantee Line and allocates 20 billion euros entirely to SMEs and self-employed workers

May 19, 2020. The Council of Ministers today approved the Agreement to activate the fourth tranche of the Guarantee Line for companies and self-employed workers, adopted by the Government on 17 March for an amount of up to 100 billion euros.

The new EUR 20 billion tranche will be used entirely to guarantee operations for SMEs and the self-employed, since they are making greater use of the Guarantee Line and play an essential role in sustaining economic activity and employment.

With the approval of this new tranche, 80 billion euros have been made available to companies and self-employed people to guarantee the funding granted by credit institutions, credit financial institutions, payment institutions and electronic money institutions.

In addition, 4 billion euros have been approved to guarantee the emissions of promissory notes in the Alternative Fixed Income Market (MARF) and 500 million euros to reinforce the reguarantee that CERSA grants to Reciprocal Guarantee Companies.

Of the total volume of resources approved, the self-employed and SMEs already benefit from 60 billion euros in guarantees to guarantee their liquidity and cover their circulating needs.

A total of 123 financial institutions have signed the corresponding collaboration agreements and are distributing the financing with the State’s guarantee to customers who need it.

The wide coverage and territorial implementation of credit institutions, rural funds, credit financial institutions, electronic money institutions and payment institutions guarantee the distribution of guarantees between companies and self-employed persons in all sectors of activity and anywhere in the country.

Over 50 billion euros in funding

Spanish companies have already received more than 50 billion guaranteed funding with the Guarantee Line. With data as of May 17, 394,543 financing operations have been approved, with an approved amount of 38,631 million euros.

The largest volume of operations and financing is concentrated in SMEs and the self-employed, with 387,039 loans approved, 98% of the total, and an approved amount of 26,992 million euros. These guarantees have allowed these companies to receive 33,804 million euros of funding to guarantee their liquidity and cover their circulating needs.

The largest companies have received more than 17 billion euros in funding, through 7,504 operations backed with 11,638 million euros.

Avales Line Features

The guarantees of this fourth tranche may be requested by SMEs and self-employed workers affected by the economic effects of COVID-19, provided that the applicants were not in a delinquent situation as of December 31, 2019 and in insolvency proceedings as of March 17, 2020.

The guarantee guarantees 80% of the new loans and renovations of operations requested by self-employed and SMEs and has a validity equal to the term of the loan granted, with a maximum of five years.

Interested SMEs and self-employed people will be able to apply for the guarantee for their operations until September 30, 2020. The deadline may be extended, always in line with the State Aid regulations of the European Union, by Agreement of the Council of Ministers.

The distribution of the guarantee line between the entities will be carried out with the same criteria as those established in the previous sections, depending on the market share communicated by each financial entity to the Bank of Spain at the end of 2019.

The maximum volume allocated for each entity will be valid until June 30. From that date, the amounts of collateral allocated and not used by the entities shall be distributed among the other entities, in proportion to the amount of collateral they have used up to that date.

The ICO broadcasts fortnightly through its website (https://www.ico.es/web/ico/linea-avales) Data on the evolution of this line of guarantees, with information by size of beneficiary company, sector of activity and autonomous community.