Guaranteed Bank Loans

SPN MJ MonteroThe Central Government has approved the first batch of 20,000 million in bank guarantees so that  banks can start lending to businesses and autónomos.

This measure is to provide liquidity for businesses struggling to stay afloat within the Coronavirus crisis.

Half of that amount will be used as guarantees for new loans taken out by autónomos and  pymes (small & medium businesses) explained the Minister for Hacienda and Government Spokeswoman, María Jesús Montero following a Board of Ministers meeting.

This is the first part of 100,000m global plan announced by the Government a week ago, but one which has still not been formulated.

These bank guarantees cover different sections depending on who the loan is for. In the case of autónomos and pymes, the Government will guarantee 80% of any new loan taken out or loan renewal, whilst for larger businesses they will guarantee 70% of a loans and 60% on loan renewals.

As announced by Deputy Prime Minister, Nadia Calviño, the line of bank guarantees will be retroactive as far back as the 18th of March, permitting businesses and autónomos to deal with the payment of salaries, bills, liabilities, loans and taxes.

The bank guarantee,  will cover the period of the loan up to a maximum of five years and can be requested up to the 30th of September.

Although only 20% of the global amount has been released, the Minister assured that when it has been used up another percentage will automatically be made available until the full 100,000 million is reached.


“We want to see how this mechanism behaves so we can tweak it as it plays out,” explained Tax Minister, Sra. Montero.

However the Government has not set out the criteria that banks should use for these loans and it is left entirely up to the banking sector but the Minister hopes that they will be “reasonable” about it. In other words, we’re talking about interest rates. In her opinion the problem about such loans is not what interest is charged but that the risk is covered.

And now for the bit that you didn’t want to read: autónomos will have to continue making their monthly payments. This has been a constant demand from the sector but the Government has still not accepted this measure. The Head of the Federación de Autónomos point out that without any income autónomos would be unable to pay them and will have to pay a surcharge of late payment.

Whilst the federation appreciates the credit lines with 80% government-backed bank guarantees, it calls upon the Government to stop causing more confusion and suspend S.S. payments as the sector is slowly asphyxiating.

(News: Spain)

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