Extraordinary measures to provide solvency to businesses

Extraordinary measures to provide solvency to businesses in response to the COVID-19 pandemic

Information on the measures

On Friday, March 12, 2021, the Council of Ministers approved Royal Decree Law 5/2021, Extraordinary measures to provide solvency to businesses, aimed at continuing to protect the productive fabric, avoiding a structural impact on the economy and preserving employment. 

With four areas of action, three consisting of funds for viable companies with a total of €11 billion, and a fourth one to expand bankruptcy moratoriums and other measures to defer tax debt.

Specifically, three aid funds are created for viable companies whose asset situation has deteriorated as a result of the pandemic.

Conditions for the three funds

 

 

    • a) They must engage in the activity associated with the grants until June 30, 2022.
    • b) They may not pay dividends in 2021 and 2022.
    • c) Not approve increases in senior management remuneration for a period of two years from the application of any of the measures.

    Similarly, the RDL approves extending until December 31 the deadline to apply for ICO-backed loans. If you have not applied, you can find more information here.

This initial aid package, budgeted at €7 billion, is provided to let the Autonomous Communities channel assistance to self-employed workers and businesses in the most affected sectors (the CNAEs are determined in the decree itself in Annex I). It will be accessible to all those whose volume of transactions fell by more than 30% in 2020 vs 2019.

This €7 billion have two allocations: €5 billion to all the Autonomous Communities (except the Balearic Islands and the Canary Islands) and the autonomous cities of Ceuta and Melilla, and €2 billion to the Autonomous Communities of the Balearic Islands and the Canary Islands.

These grants will be targeted for obligations between 03/01/2020 and 05/31/2021 that were entered into prior to the publication of this RDL. This targeted criterion has a specific priority, first suppliers by age, and then financial debt, with priority given to debt that is backed by the state.

The RDL lays out a general framework that can be amended by the Autonomous Communities.

  • For individual entrepreneurs with objective estimate ("modules"), €3,000.
  • For individual business owners or companies with direct estimate, two subgroups are defined, with amount limits ranging from €4,000 to €200,000.
  • Up to 10 employees, the aid will be 40% for anything over a 30% decrease.
  • Over 10 employees, the aid will be 20% for anything over a 30% decrease.

A one-month period is in place for the Autonomous Communities to sign the corresponding agreements.