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Line of guarantees for financing granted to companies and the self-employed
23/05/2022

Line of guarantees for financing granted to companies and the self-employed

Line of guarantees for financing granted to companies and the self-employed included in the National Plan of response to the war in Ukraine (RD-law 6/2022)

The Official State Gazette of 11 May published the Agreement of the Council of Ministers that establishes the characteristics of the first tranche of the Line of Guarantees for companies and the self-employed, for up to 5,000 million euros, which forms part of the measures included in the National Response Plan to the economic and social consequences of the war in Ukraine (Royal Decree-Law 6/2022).

The new line of guarantees is intended to cover the corresponding part of the principal of new financing operations granted by eligible supervised financial institutions to companies and the self-employed, belonging to all productive sectors except the financial and insurance sectors, which are affected by the economic effects of the war in Ukraine, such as the increase in the prices of energy, raw materials or electricity.

The guarantees may be requested by institutions from the ICO until 1 December 2022.

The self-employed and companies may not be in a situation of default or in bankruptcy proceedings at the date of signing the financing operation, nor be subject to sanctions by the EU, nor have at the time of the application for the guarantee any process of execution of guarantees managed by the ICO.

The guarantee will guarantee up to 80% of the principal of the financing operation. The nominal amount guaranteed may not exceed 400,000 euros per beneficiary, in general, or 35,000 euros in the case of companies active in the primary sector, aquaculture or fisheries, in one or more loan operations. In these cases, the term of the guarantee issued will coincide with the term of the operation up to a maximum of 10 years.

In the absence of other aid under section 2.1 of the Temporary Framework for Ukraine, with 80% coverage, the guaranteed loan principal may not exceed EUR 500,000 per beneficiary, in general, or EUR 43,750 in the case of enterprises active in the primary sector, aquaculture or fisheries, in one or more loan operations. When the beneficiary of the guarantee operates in several sectors to which different maximum amounts apply, the maximum limit of the sector of activity with the lowest maximum amount shall be applied to the beneficiary’s operations as a whole.

For loans with a higher volume, the guarantee may guarantee up to 80% of the amount of the loan for SMEs and the self-employed and up to 70% for other companies, although the nominal amount to be guaranteed may not exceed 15% of the beneficiary’s total average annual turnover over the last three financial years, or 50% of the energy costs in the twelve months prior to the month in which the aid is requested from the bank, which costs must be accredited by an energy supplier or independent technical services. For these loans, the guarantee will also coincide with the repayment period of the operation, which will be up to eight years.

At the request of the borrower, the financial entity will be obliged to establish, at least, an initial grace period of 12 months for the repayment instalments of the principal of the operation, and the financial entities undertake to keep their clients’ working capital lines open until 31 December 2022. 

The financial institutions must apply the best banking uses and practices for the benefit of their customers and may not make the approval of the loans conditional on the customer contracting other products from the institution.