Extension of the maturity term and lack of COVID loans

Royal Decree-Law 34/2020, of November 17, on urgent measures to support business solvency, adopted a series of aids (covid loans) to promote access to financing for companies and the self-employed to prevent eventual liquidity tensions turning into solvency problems.

Specifically, for financing operations formalized before November 18, 2020, and endorsed by the State under Royal Decree-Law 8/2020, entrepreneurs and freelancers have been offered the possibility of requesting their financial institutions to extend their up to a maximum of 3 additional years of the expiration period and up to 12 additional months of the grace period concerning the initially agreed terms.

In addition, due to the opening of a new temporary framework for European aid, since last January 28, the Spanish Executive has been empowered to approve a new package of subsidies for companies. Among other possibilities, the conversion of ICO loans into grants is being considered, so perhaps and only perhaps, you can see some part of your ICO loans forgiven.

What extension of the maturity period and / or grace period in guaranteed financing operations can the self-employed and companies interested in availing themselves of this measure request?

The term of maturity of the guarantees will be extended for a maximum period of three years, provided that the total of the operation does not exceed eight years from the date of initial formalization. The extension of the maturity of the guarantee will coincide with the extension of the maturity of the guaranteed loan.

Likewise, the extension of the grace period in the repayment of the principal of the guaranteed financing operation may be requested in a maximum of twelve additional months, provided that the total grace period, taking into account the initial term, does not exceed 24 months.

What requirements do the self-employed and companies have to meet in order to request an extension of the expiration date and / or grace period of the guaranteed financing?

To request the extension of the term and grace period provided for in Royal Decree-Law 34/2020, of November 17, the self-employed person or company (from now on the debtor of covid loans) must meet the following requirements :

  • That the debtor request the extension at the financial institution that granted him the guaranteed financing.
  • That the guaranteed financing operation is not in default ( more than 90 days unpaid ), nor is any of the remaining financings granted by the entity to the same client.
  • Not appear in a situation of delinquency in the consultation of the files of the Central Risk Information Center of the Bank of Spain (CIRBE) on the date of formalization of the extension.
  • That the financial institution has not communicated to the entity granting the guarantee any non-payment of the operation guaranteed with the debtor on the date of the formalization of the extension.
  • That the debtor is not subject to bankruptcy proceedings. 
  • That the guaranteed financing, granted within the framework of the Liquidity Guarantee Line of Royal Decree-Law 8/2020, of March 17, for which the extension of terms or grace period is requested, has been formalized before the 18th of November 2020.
  • That the debtor complies, to request the extension of the guarantee, with the limits established in the State Aid regulations of the European Union.

Where can freelancers and companies that meet the requirements submit the request for an extension of the term?

They must contact the financial institution to formalize the guaranteed financing operation.

The entities will apply the best banking uses and practices for the benefit of clients. They may not condition the modification of the conditions of the loans covered by the public guarantee or the rest of the measures provided for the contracting by the client of any other products of the entity.

How long do the entities have to resolve the requests?

The entities will have a maximum of 30 calendar days to resolve the debtor’s request. If the request is deemed to meet the indicated requirements, notify the Official Credit Institute of the request to modify the guarantee terms.

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