▷ The Government gives the green light to 7,000 million in direct aid in Spain

The government approved today the 11,000 million euro plan announced by the executive president, Pedro Sánchez, a few days ago at a special ministerial meeting. Finally, 60% of this amount will go to direct aid, for a total of 7,000 million euros.

Of this figure, 2,000 million will be reserved for the Balearic Islands and the Canary Islands, as they are the areas most affected by the health crisis, while 5,000 million will be reserved for the rest of the autonomous communities.

Regarding the remaining 4,000 million, there will be 3,000 million new guarantees dedicated to ICOs, and another 1,000 million will be used for capital injections of medium-sized companies.

Amount of aid

The amount of the aid varies according to the type of company, so the self-employed registered in the objective assessment system of the IPRF can opt for a fixed amount of 3,000 euros. While the rest of the self-employed and companies can demand a price between 4,000 and 200,000 euros.

In any case, the amount of aid does not exceed 40% of the additional drop in income caused by the pandemic of micro-businesses and the self-employed, while in other cases this percentage is reduced to 20%.

Grants are definitive grants, so they must be used to pay debts incurred since March 2020, such as payments to suppliers, supplies, salaries, leases or financial debts.

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Aid-Companies-7000-million
Photo: Pool Moncloa / Borja Puig de la Bellacasa
The Minister of Finance and Government Spokesperson, María Jesús Montero, and the Third Vice President and Minister of Economic Affairs and Digital Transformation, Nadia Calviño, during the press conference after the Council of Ministers.

The distribution of aid will continue with the activities until June 2022, as well as other requirements, among them the prohibition of distribution of dividends and the increase in salary of the managerial staff. The company must also pay tax obligations in a timely manner and must not operate in a tax haven.

The grants will be managed by the Autonomous Communities, and the allocation of funds will follow the same criteria as those used by REACT-EU.

Measures to support the solvency of companies

On the other hand, the Government has also approved measures to support the solvency of companies, including the extension of the suspension period of the obligation to request bankruptcy, which expires next Sunday.

In November, it approved a royal decree on economic measures, among other things, the decree was extended until mid-March to suspend the obligation to declare bankruptcy. That is, a requirement for an existing bankrupt company to declare bankruptcy.

Previously, in April, due to the coronavirus pandemic, the government had extended this moratorium until December 31 in response to the foreseeable increase in bankruptcy proceedings in commercial courts.

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Now, the government has once again extended the period of suspension of bankruptcy so that companies that are viable under normal market conditions have legal instruments that allow them to maintain their activities and employment.

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