Coronavirus Loans and Finance Options in Spain

Spain’s government announced a series of measures which outline how both government and banks plan to assist struggling companies and citizens as a result of the coronavirus impact. Below is a guide of available loans and finance schemes available. An initial tranche of 20 billion euros was released as part of a state-backed credit line.

Moratorium Schemes

Mortgage moratorium

The government announced a mortgage moratorium for debtors struggling to make repayments due to the financial implications caused by the coronavirus pandemic. The payment holiday will apply to debts incurred for the acquisition of the primary residence, investment property where rental income is lost, and properties affected by the current economic crisis. Also, no interest will be accrued for as long as the moratorium is in place.

A list of requirements is made available to qualify for the moratorium. These include a state of economic vulnerability for persons who have lost employment, professionals with a substantial loss of income, and self-employed people with more than 40% decline in sales. Furthermore, the break extends to anyone who enters into a health emergency as a result of the pandemic. Also, people with more than 35% of their net income in mortgage debt and living expenses. Applicants are required to present supporting documents to the creditor, and the moratorium is valid for three months from the date of application.

Consumer credit moratorium

Creditors experiencing financial difficulties and are unable to meet up with payments for consumer credits can apply for this moratorium. The moratorium shall be valid for three months, and creditors will be barred from claiming payments during this time. Also no interest payable for the late payments. 

Guarantees provided by the Spanish government

This loan guarantee program aims at assisting companies and self-employed with liquidity for the upkeep and operations of the business. The Spanish government announced an 80% guarantee on new loans and credit facilities for individuals and SME’s with less than 250 employees. Eligible companies will be those based in Spain and displaying no history of financial difficulties and bad repayments as of December 32, 2019.

Furthermore, credit insurance coverage created by the Spanish government is made available via the Spanish ECA. This hopes to boost export contracts and will not insure for more than 80%. Companies facing liquid difficulty as a result of the current global pandemic may apply. The company should demonstrate that a third of its business is international.

The Spanish Umbrella Scheme

 The European Commission approved a second ‘umbrella scheme‘ on 24 March, to support Spanish Authorities in providing financial assistance to companies affected by the COVID-19 pandemic. Measures in place will support direct grants, tax and payment advantages, as well as repayable advances. An amount of €800 000 is capped per company.

Along with the provided loan facilities and moratorium solutions, the Spanish government makes relief measures and an outlined stimulus package to keep the economy running. To learn more about ways the government schemes in place, read: Spain’s Government Schemes in Response to COVID-19.

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