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Donald Trump Releases Another 20,000 Million In Guarantees For Smes After Pressure From Banks?

Donald Trump Releases Another 20,000 Million In Guarantees For Smes After Pressure From Banks?

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by April 12, 2020 News

Government Releases Tomorrow the government will approve the release of another 20,000 million euros in public guarantees so that the financing will flow and mitigate the hard impact that the coronavirus crisis is having on SMEs and the self-employed.

Government Releases Another 20000 Million In Guarantees For

Government Releases Another 20000 Million In Guarantees For

The measure will come just five days after the endorsement plan was launched by the Official Credit Institute (ICO) and in the face of notable pressure in recent days from banks and business organizations.

This second tranche will be aimed only at small companies and the self-employed, who have been the most knocking on the door of financial institutions in recent weeks, suffocated by the paralysis of their businesses.

As EL MUNDO published, the banks have transferred in recent days to the Ministry of Economy led by Nadia Calviño and the Bank of Spain, which would exhaust the quota allocated in the first tranche of guarantees throughout this week. In that case, 10 billion were reserved for large companies and another 10 billion for SMEs.

The first days of the plan have revealed that most of the requests that reach banks come from SMEs, which account for 99% of the country’s business fabric. In the case of some entities, the requests already doubled on Monday the capacity assigned by the Government based on their share of business in credit to companies.

Sources of the Economy explain that today 3,000 of the 10,000 million have been processed in public guarantees made available to banks.

Government Releases Another 20,000 Million In Guarantees For Smes After Pressure From Banks

The relationship between the ICO and the entities themselves, whose capacity is diminished these days by the partial closure of offices and the teleworking of most of its staff, is not being as agile as the Government would have liked. That figure will be more than reached in the coming days.

For this reason, in Economy they insist that not opening a second tranche of the guarantees would prevent a bank from continuing to grant loans in the next few days to needy companies.

Specifically, this is BBVA, which reported on Tuesday that it had already exhausted its quota after carrying out more than 70,000 negotiations with its clients. “SMEs and the self-employed are the ones with the greatest need and urgency for liquidity at this time,” warned the group chaired by Carlos Torres.

The Prime Minister, Pedro Sánchez, explained during his speech before the plenary session of Congress, to which he went to request the extension of the validity of the state of alarm until April 26, which he expects more than 1.3 million of freelancers and companies benefit from this line of public guarantees, from the maximum of 100,000 million announced by the Executive at the beginning.

Likewise, he has said that another 130,000 companies and the self-employed will benefit from the extension of the debt limit of the ICO, to increase all its financing lines, to a total of 10,000 million euros.

In the first four days of the program, 33,000 applications for guarantees for more than 2,800 million euros have been processed, of which practically all have been addressed to SMEs and the self-employed

Financing for SMEs is the easiest to process, since the concession criteria are fully assigned to entities. In the case of credits of more than 50 million euros -common among large companies-, the ICO itself must carry out a preliminary examination to give the green light to financing.

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