## [COVID-19: Official State Gazette publishes decision defining first tranche of guarantees in Spain](/en_GB/new/covid-19-official-state-gazette-publishes-decision-defining-first-tranche-guarantees-spain)
# COVID-19: Official State Gazette publishes decision defining first tranche of guarantees in Spain
Spain - 03 / 26 / 2020
Spain Banking and Finance Alert
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**This guarantee facility is to be managed by ICO and will cover new loans and other types of financing provided by financial institutions to companies and the self-employed to soften the economic effects of COVID-19.**
On March 26 the Official State Gazette published the decision by the Secretary of State for Economy and Business Support, setting out the terms and conditions for the first tranche of up to €20,000 million for public guarantee facilities, committed by the government in Royal Decree-Law 8/2020.
This guarantee facility, to be managed by ICO, Spain’s official credit institute, is made available to cover new loans and other types of financing and renewals provided by financial institutions to companies and the self-employed to meet their financing needs for salary payments, invoices, working capital requirements or other liquidity needs, including those determined by financial or tax obligations falling due, for the purposes of enabling them to maintain employment and to soften the economic effects of COVID-19.
It is important to note that companies and/or self-employed individuals will not be eligible to use the facility if they were included on the bad credit list held by CIRBE, the Bank of Spain Risk Information Center, as of December 31, 2019, or if, on March 17, 2020, they had filed for an insolvency order, or were in any of the circumstances described in article 2.4 of Law 22/2003, the Insolvency Law (for example, a general inability to meet payment obligations as they fall due; the existence of attachments due to outstanding enforcements which have a broad effect on the debtor’s property; or failure to pay, over the previous three months, tax obligations, social security contributions, employees’ wages and severance or indemnity payments).
The decision determines the conditions that must be satisfied for making use these guarantee facilities:
1. Of the total amount in this tranche, €10,000 million will be earmarked for loan renewals and new loans to the self-employed and small and medium-sized companies, and another €10,000 million, to companies not having small and medium-sized company status.
2. For loans and other transactions to be classed as eligible and able to be guaranteed with this facility:
o They must have been provided to companies domiciled in Spain, and entered into or renewed after March 17, 2020;
o The companies must not be included on the bad credit list held by CIRBE or be subject to an insolvency proceeding;
o It falls within the exemptions from treatment as state aid or in the framework approved by the European Commission for state aid on March 19, 2020 (Temporary Framework for State Aid);
o Transactions may be guaranteed in respect of amounts up to €50 million where approved by the relevant entity, and above that amount, after ICO has examined satisfaction of the eligibility conditions in addition to their examination by the financial institution.
1. Time periods and financial terms and conditions:
o In the cases of small and medium-sized companies and self-employed individuals, the guarantee facility will not be able to cover more than 80% of the transaction concerned.
o At other companies, the maximum percentage will be 70% for new transactions and 60% for renewal transactions.
o Applications may be made until September 30, 2020 and the guarantees cannot be for terms above 5 years.
o The decision also determines the fees and the remuneration payable to ICO for use of the described facility (between 20 and 120 annual basis points depending on the transaction amount and term).
This first tranche of the guarantee facility has been notified by Spain to the European Commission and authorized by it under the [new Temporary Framework for state aid measures](https://www.garrigues.com/es_ES/noticia/covid-19-la-comision-europea-adopta-un-marco-temporal-para-la-autorizacion-de-ayudas-de) to support the economy in the current COVID-19 outbreak.
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