COVID-19 New Credit Lines Autonomos and Businesses To Re-Activate (Tourism) Economy

Summary of measures approved in a Royal Decree published in the State Gazette on the 6th of July 2020.

Approval of a Credit Line for coverage on behalf of the State of the financing provided by supervised financial institutions to companies and the self-employed with the main purpose of financing investments.
In order to promote the country’s economic recovery, the Ministry of Economic Affairs and Digital Transformation will grant guarantees to the financing granted by supervised financial entities to companies and self-employed to attend, mainly, their financial needs derived from making new investments.

This could result in more favourable conditions for loans/credits applied for to cover costs of new investments. Please check the ICO website regularly for updates, or make enquiries at your bank.

Article 3. Moratorium on mortgage loans granted to finance buildings affected by a tourist activity.
1. Self-employed workers and legal entities with registered office in Spain will be entitled to a moratorium on the payment of the principal of the loans with mortgage guarantee on a property that meets the requirements set forth in the Article 4, provided that:
a) They experience financial difficulties as a result of the health emergency caused by COVID-19, and
b) the loan has not already been subject to any of the following moratoriums:
1.º The one provided for in Royal Decree-Law 8/2020, of March 17, on urgent extraordinary measures to face the economic and social impact of COVID-19,
2. The one provided for in Royal Decree-Law 19/2020, of May 26, by which complementary measures in agrarian, scientific, economic, employment and Social Security and tax are adopted to mitigate the effects of COVID-19.
3. The one that has been voluntarily agreed between the debtor and the creditor after the entry into force of Royal Decree 463/2020, of March 14, which declares the state of alarm for the management of the health crisis situation
caused by COVID-19. However, the debtor may benefit from the moratorium provided in this chapter if they previously waive the voluntary moratorium that is referred to here.
2. When the loan has been the subject of any of the moratoriums provided for in the letter b) of paragraph 1 for a period of less than twelve months, the debtor may benefit from the moratorium provided for in this chapter for the remaining time until it reaches a total of twelve months.
3. For the purposes of the provisions of this chapter, tourist activity shall be understood that which is included in any of the codes of the National Classification of Economic Activities (CNAE) that are included in the third additional provision (CNAE 5510 (Hotels and similar accommodation), 5520 (Tourist accommodation and other short-stay accommodation) and 7911 (Activities of travel agency).
4. Financial difficulties are considered to exist as a result of the emergency for the purposes of the provisions of section 1.a), when mortgage debtors as those referred to in section 1 have suffered in the monthly average of the months of March to May 2020, a reduction in income or turnover of at least 40% in the monthly average of the same months of the year 2019.
Accreditation of the reduction of income or billing will be done through the contribution of accounting information that justifies it, which can be done through the copy of the record book of invoices issued and received; from the income journal and expenses; from the sales and income record book; or from the book of purchases and expenses.
Self-employed workers who are not obliged to keep the books that prove the volume of activity, must prove the reduction required by any means of evidence admitted in law.
5. Financial difficulties will not be deemed to exist as a result of the health emergency, for the purposes of the provisions of section 1.a), when:
a) the loan whose moratorium is requested, having been the object of total default or partial of any of its quotas from before January 1, 2020, upon entry into force of this royal decree law is in default.
b) the debtor’s bankruptcy had been declared prior to the entry into force of Royal Decree 463/2020, of March 14, declaring the state of alarm for the management of the health crisis situation caused by COVID-19.

Request for a moratorium.
1. The mortgage debtors referred to in article 3 may request the creditor a moratorium period of up to twelve months in the payment of the principal of the mortgage debt.
2. The request may be submitted from the entry into force of this royal decree-law until the end of the period set in point 10 of the Banking Authority Guidelines Commission on legislative and non-legislative moratoriums on loan repayments applied in light of the COVID-19 crisis (EBA / GL / 2020/02) or even the extensions of said term that, where appropriate, could be established.

Please check with your credit company or bank for the exact paperwork to file.

Moratorium in the event of leasing the real estate.
1. If the property affects the development of an economic activity in the tourism sector were the object of a lease, the beneficiary of the mortgage moratorium must grant the lessee a moratorium on the payment of the lease of at least 70% of the amount of the mortgage moratorium, provided that such deferment of the total or partial cancellation of the same would not have been obtained by agreement between both sides.
2. When there are no anticipated financial difficulties in the mortgage debtor but in the lessee, he may urge
from his landlord the request for the mortgage moratorium, for which purpose it will facilitate the necessary documentation to prove the loss of income.

Extraordinary project financing system for digital transformation and innovation in the tourism sector
Article 11. Extraordinary financing line.
1. The regulatory bases of the call corresponding to the financial year 2020, in a competitive competition regime, to grant financial support to private companies and self-employed workers in the tourism sector affected
by economic damages arising from COVID-19, in the development of projects of digital transformation and innovation.

It will be understood that the applicant develops a tourist activity if it has been, at least, since January 1, 2019 framed in some of the activities considered, even if it is in a different one from the one for which financing is applied.
Loan applicants must prove, at the time of submission of their application, a level of own funds equivalent to 33% of the total equity and liabilities.

Please contact your gestor about deadlines and conditions.

Please note: The information provided is based upon our understanding of current legislation. It is not legal advice but is provided freely to enable you to be properly informed. We recommend that if you are considering taking action, you should seek professional advice.