Requirements and impediments to request a credit or guarantee from the ICO

One of the pillars of the return to economic activity is to recover liquidity and financing, both for the self-employed and for SMEs and large companies. A possible solution is to request one of the credits and guarantees that the Official Credit Institute has launched. But how are they requested and what requirements must be met? The Administration has already put into circulation 40,000 million, of which 30,000 have been specifically destined for SMEs and the self-employed. Who are these credits and guarantees for?

Where should we order them? To start, the self-employed and entrepreneurs do not have to go to the ICO offices, but to their financial institution. It is they who act as intermediaries to process this aid. Those financial entities that can be used are banks, so-called financial credit establishments, electronic money entities, and payment institutions.

What can they be asked for? Our bank or the entity that we choose will be the one that decides whether to grant a new loan, or if it renews those that it had already granted, depending on what we ask for. When should they be requested? Financial institutions can request the guarantee for loans formalized or renewed from March 18 to September 30.

What can they be used for? This money can only be used for certain things that have to do with meeting the most immediate financial obligations, such as: paying wages, invoices to suppliers, renting premises, offices and facilities, and supply expenses. And also in order to have working capital or pay taxes and other obligations.

What are the endorsements for? There are other limitations to access this financing. For example, guaranteed financing cannot be applied to the cancellation or early amortization of pre-existing debts. Nor does it serve to cover concepts that are different from the operation, such as the payment of interest, commissions or the expenses of those operations.

By the way, in the case of freelancers and SMEs, the guarantee guarantees 80 percent of the principal of new loans, and of renewals. And the term of the guarantee coincides with the maximum term of the operation, which will be five years.

Who cannot access these measures? These guarantees are not for all the self-employed and SMEs. It is important to know that there are situations in which they cannot be accessed. For example, neither the self-employed nor the companies that appear in a delinquent situation according to the files of the Bank of Spain, as of December 31, 2019, cannot access these credit facilities. Neither those who are subject to bankruptcy, nor those who they are in a crisis situation on the last day of last year, so that the aid is incompatible with the laws of the European Union.

Financial institutions and banks also have their own obligations. For example, they agree to maintain the limit on outstanding credit lines, at least until September 30. They must maintain the commissions and costs costs they charged on pre-crisis loans. They are also required to charge less interest, or give more time to pay it back. Banks and others also have a limitation: they cannot condition the granting of a loan, or its renewal, to the client contracting other financial products. The fall in demand causes many self-employed workers to find themselves in a difficult situation due to the lack of liquidity. The guarantees granted by the ICO are intended to help alleviate this situation.

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