Royal Decree-Law 34/2020 of November 17

Good news for the self-employed and SMEs: the government has approved, through Royal Decree-Law (RDL), important measures aimed at alleviating foreseeable cash flow problems for companies in the upcoming 2021 financial year.

In general terms, companies that signed what we know as Covid ICOs can extend both the grace period for capital repayment and the total duration of the loan, with a simple request to the Financial Institution that formalized it, provided that they continue to meet the requirements that were originally demanded of them to obtain the loan with the guarantee of the ICO.

Specifically (Article 1 of Royal Decree-Law 34/2020):

1. Operating loans in the guarantee lines approved by Royal Decree-Law 8/2020 (March 17) may extend their maturity by a maximum of three years, without being able to exceed eight years.
2. Both the operating credits in the guarantee lines approved by Royal Decree-Law 8/2020 (March 17), and the operating credits in those approved by Royal Decree-Law 25/2020 (July 3) may extend the grace period in the repayment of the capital by a maximum of twelve months, without being able to exceed two years.
3. Both measures are initiated by the debtor; that is, businesses (self-employed individuals and SMEs) must request these extensions from the financial institution. They must also meet the following requirements:
   a. None of the financial transactions carried out with that institution are in arrears (more than 90 days overdue).
   b. The institution is not listed as in arrears in its Central Credit Register (CIRBE).
   c. The institution has not notified the ICO of any default on the transaction for which the extension is requested.
   d. The debtor is not in bankruptcy proceedings.
   e. The request pertains to transactions prior to the publication of this regulation.
   f. The request is made before May 15, 2021.
   g. The debtor complies with the limits established in the European Union's State Aid regulations.
4.  If the Debtor meets all the requirements, the Financial Institution must apply these measures, complying with the best practices for the benefit of its clients, without conditioning them on the acquisition of other products, and may only pass on the increased cost of the guarantees.
5.  Financial institutions have a maximum of 30 days to decide on the debtor's request.

The ICO has summarized the set of measures in this standard in the following infographic:

https://www.ico.es/web/ico/notas-de-prensa/-/blogs

Consult any questions with our advisors.

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Pau Riera Rey

General Director at Àmbit Assessor

A graduate in Economics from the University of Barcelona, ​​he is also a Certified Actuary, Real Estate Agent, and Insurance Broker.
He furthered his training with courses in taxation, business valuation, and credit management offered by the College of Economists of Catalonia and the Center for Financial Studies (CEF).
In 2000, he became the managing partner of the firm, and since 2011, he has also been responsible for the Finance Department.
For five years, while already a member of the management team at Àmbit Assessor, he also held the positions of Deputy General Manager and Finance Director at Alco Grupo Empresarial.

Latest posts by Pau Riera Rey (see all)

• Extension of deadlines for ICO loans. - December 9, 2020
• Extraordinary General Financing Measures as a consequence of the State of Alarm due to Covid-19. - March 27, 2020
• Cash flow strain. - February 18, 2020