About the spanish Official Credit Institute “ICO Loans”

ROYAL DECREE 34/2020 OF 17 NOVEMBER ON URGENT MEASURES TO SUPPORT BUSINESS SOLVENCY AND THE ENERGY AND TAX SECTORS.

Extension of the maturity and grace periods for financing operations for the self-employed and businesses which have received a public guarantee channelled through the Official Credit Institute ICO LOANS.

Extension of the maturity of the guarantees released in accordance with Royal Decree 18/2020 of 17 March for a maximum additional period of 3 years, provided that the requirements for this purpose continue to be met and that the total maturity of the guaranteed operation does not exceed 8 years from the date of the initial formalisation of the operation. The extension of the maturity of the guarantee will coincide with the extension of the maturity of the guaranteed loan.

The request for extension must be made by the debtor.

Similarly, the grace period for the repayment of the principal of the guaranteed operation is increased by a maximum of 12 months (1 year), but provided that the total grace period, including the initial grace period, does not exceed 24 months (2 years).

The capital of the instalments of the grace period by prior agreement between the parties may be accumulated to the last instalment of the loan, pro rata to the remaining instalments or combined with both systems. In the absence of agreement, it will be pro-rated on the remaining instalments.

The limits of the working capital lines granted to all debtors are maintained until 30.06.2021 if they comply with the regulations.

Requirements for requesting such extension by the debtor:

  • The extension must have been requested.
  • The financed operation cannot be in arrears (unpaid + 90 days) nor other financing granted by the entity to the same client.
  • The debtor cannot appear as being in default on the CIRBE on the date of the request for extension.
  • The financial institution must not have notified the institution granting the guarantee of non-payment by the debtor on the date of the request for extension.
  • The debtor must not be involved in bankruptcy proceedings.
  • The guaranteed operation must be prior to the publication of these regulations.
  • The application must be made before 15.05.2021.
  • The debtor must comply with the limits of the EU State Aid rules.

Obligations of financial institutions:

  • Application of best banking practices for the benefit of customers and may not condition the modification of the conditions of loans covered by the public guarantee or other measures.
  • The costs of the loans will remain in line with the costs charged before the extension and may only be increased to reflect an increase in the remuneration of the guarantee.
  • They will indicate in their accounting and risk management the modification of the terms initially foreseen and in their cao, the new conditions in order to facilitate their traceability and will incorporate this signalling in their declaration to the central risk information.

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