Companies will be able to apply for direct aid of up to €200,000 and the self-employed will receive €3,000

Cabinet gives green light to €11bn package

3 min
The Minister Spokesperson and Minister of Finance, María Jesús Montero, and the Minister of Economy, Nadia Calviño.

MadridThe companies and the self-employed most affected by the pandemic will be able to access direct public aid. The cabinet has approved a decree this Friday that includes a package of €11bn for companies and the self-employed, money that will serve to prevent viable businesses become bankrupt. Non-repayable aid is the bulk of the plan: in total, €7bn will be managed by the autonomous communities. But the criteria for granting them will be common throughout the state. "We will try to cushion the fall in income and over-indebtedness of companies, as this may jeopardise their survival," stressed the economic vice president, Nadia Calviño.

The decree details the conditions for access to direct aid: companies or self-employed in the sectors affected by the pandemic that prove to have reduced their year-on-year income by at 30% in 2020 and can only be used to pay for fixed costs such as rent and to settle debts with suppliers or other creditors. As for the amounts, the self-employed who are taxed by objective estimation of income tax may request a lump sum of €3,000, while the rest of the self-employed and companies will be eligible for aid of between €4,000 and €200,000 euros in accordance with the fall in turnover.

The decree specifies that there will be conditions. Companies and the self-employed who receive direct aid will have to maintain their activity at least until June 30, 2022. In addition, they may not distribute dividends or increase the remuneration of managers. Only companies and self-employed workers in the sectors affected by the pandemic will be able to access the non-refundable aid: the executive has not made public the exhaustive list of sectors and refers to the publication of the decree in the BOE -probably this Saturday-, but notes that the sectors affected will be tourism, hotels and restaurants, and industries related to trade and hospitality. Auxiliary areas of transport or activities related to culture and sport will also be included.

Lifeline for companies

The Spanish government has yielded to pressure to inject direct aid to save the productive fabric. The third wave of the pandemic, with major restrictions on catering and mobility to much of the state, has left many SMEs and freelancers a step away from bankruptcy. A year after the start of the pandemic, the economy is still operating at half speed and normality will not begin to return until vaccination of the population is massive. The measures approved during the first year of the pandemic - in the form of guarantees, credits and furloughs - are not enough for the most affected companies to survive the crisis. Direct aid may be their lifeline. Even so, business sectors say they are too late.

The approved package is divided into three instruments: direct aid, a fund to restructure credit debts guaranteed by the Instituto de Crédiot Oficial (ICO) and another fund to recapitalise companies. The money from the latter will be injected through the public company Cofides. Of the €7bn in non-refundable aid, €2bn will be for the Balearic and Canary Islands, badly affected by the slump in tourism. The other €5bn will be distributed among the other communities, but the Spanish government has not yet made the proportional calculation. The minister spokeswoman, María Jesús Montero, has assured that they will be made "in a few days" and taking into account the economic indicators of each community in December 2020.

The State will transfer the money at the end of April

When will the money be available? Calviño explained that the State will transfer within a month and ten days - at the end of April - direct aid to the governments of the autonomous communities through the signing of agreements. The regional governments will be responsible for granting subsidies to their companies and self-employed, but the criteria will be common throughout the state. The economic vice president has not dared to give an estimate of when companies will receive the money. "The sooner the better," she has simply said.

The extraordinary cabinet meeting on Friday has also given the green light to the extension of the moratorium on insolvency proceedings until December 31. Thus, the requirement for bankrupt companies to declare bankruptcy is delayed until the end of the year.