Royal Decree-Law 34/2020, of November 17, has been published in the BOE (Official State Gazette). It includes a package of measures to support the liquidity and solvency of the self-employed and companies.
Throughout this year 2020, the ICO-Covid line of guarantees has represented the most important support for business financing. The State has guaranteed up to 80% of the principal of the new loans formalized, with interest rates that were very attractive, starting at 1% per year.
Now, in the new Royal Decree-law the following measures are presented:
- The period initially established for granting these guarantees ended on December 31, 2020. The guarantee availability period has been extended until June 30, 2021, so that banks may be requested to formalize loans guaranteed until June 1, 2021.
- Loans with a public guarantee already signed under the previous Royal Decree-Law 8/2020, of March 17, may have their maturity extended, which will be accompanied by an extension for the same term of the public guarantee. In this way, financial institutions must extend the maximum term of guaranteed loans by up to three additional years for those debtors who meet a series of requirements and request it (basically, not be in default or involved in bankruptcy proceedings). The bulk of the loans were formalized for a period of 5 years, including 1 for a grace period. The new resulting term may be extended up to 8 years including 2 of the amortization grace period.
- The financial entities will approve the extension of the terms at the request of the client in a maximum of 30 days.
- The loans that will be formalized in the future will also see the maximum term increased up to 8 years.
- The Royal Decree-Law includes a 50% reduction in notarial and registration fees, in cases where these had to be satisfied for the novation, postponement, registration or elevation to the public or intervention of the corresponding operations.
- The Official Credit Institute (ICO) may request information directly from the Risk Information Center of the Bank of Spain, in order to speed up the procedures related to the verification of unpaid payments.