Logo Guide to Business in Spain

6Preferred financing of the Official Credit Institute Instituto de Crédito Oficial or (ICO)

Consistent with its objective to contribute to economic growth and to the improvement of the distribution of national wealth, the ICO cooperates with other national and international bodies and institutions which work for the benefit of industries which, given their social, cultural, innovative or ecological significance, merit priority attention.

Thus, for a number of years the ICO has been executing multilateral institutional and/or financial cooperation agreements with similar bodies, Autonomous Communities, ministries and financial institutions with a view to helping Spanish enterprises start up new investment projects.

Apart from other lines intended for certain specific sectors, the following are the main ICO lines of financing for 2023: (i) ICO Enterprises and Entrepreneurs; (ii) ICO Mutual Guarantee Society/State-owned Agricultural Surety Corporation Guarantee; (iii) ICO Commercial Credit; (iv) ICO Red.es Accelerate; (v) ICO MITMA Sustainable Mobility, (vi) ICO Exporters, and (vii) ICO International, whose most notable characteristics are:

  • Línea ICO Empresas y Emprendedores 2023 (ICO Enterprises and Entrepreneurs Line):

    Among others, independent professionals and public and private enterprises who carry on their business activity in Spain may apply for these loans, irrespective of where their registered office for commercial or tax purposes is located and of whether the greater part of their capital is Spanish or foreign.

    Transactions will be processed directly via credit institutions with which the ICO has executed a cooperation agreement for the implementation of this line.

    The financing (which can take the form of loan, leasing arrangement, renting arrangement of line of credit) may be used for

    1. Investment projects and/or general requirements of the activity (e.g., liquidity needs: current expenses, payrolls, payments to suppliers, purchases of goods, etc.).
    2. Technological requirements, such as, in particular, the digitalization projects to promote teleworking set forth in the SME Acelera Program.
    3. Acquisition of new or second-hand fixed assets.
    4. Passenger cars and industrial vehicles
    5. The fitting-out and refurbishment of installations.
    6. Acquisition of businesses.
    7. Renovation or refurbishment of buildings, common elements and dwellings (in the case of owners’ associations, groupings of owners’ associations and private individuals).

    The maximum amount per client and year will be €12.5 million, in one or more transactions, while the repayment and grace periods will range between one of the following options:

    • Between 1 and 6 years, with a grace period of up to one year for the repayment of principal;
    • Between 7 and 9 years, with a grace period of up to two years;
    • Of 10, 12, 15 and up to 20 years, with a grace period of up to three years.

    The foregoing periods will apply independent of the items that are to be financed.

    Regarding the applicable interest rate, the client can choose between a fixed or variable rate. In the latter case, the interest rate will be reviewed weekly by the credit institution in accordance with the provisions of the related financing agreement.

    The Annual Percentage Rate (APR) applicable to the transaction comprises the cost of the initial fee applied by the credit institution plus the interest rate, and cannot surpass the following limits:

    • For 1-year forward transactions: fixed or variable interest rate plus a 2.30% margin.
    • For 2- and 3- or 4-year forward transactions: fixed or variable interest rate, plus a 4% margin.
    • For forward transactions of 5 or more years: fixed or variable interest rate plus a margin of up to 4.30%.

    As regards fees, the credit institution may charge a fee at the start of the transaction which, together with the interest rate set by the credit institution, may not exceed the maximum APR that the credit institution can apply to the transaction according to its term.

    In addition, where the transaction has been formalized at a fixed rate, a voluntary early repayment fee may be charged which will be 1% of the amount cancelled. On the other hand, where it has been formalized at a variable rate, a maximum fee of 0.50% will be charged, depending on the residual life of the transaction on the settlement date of the repayment.

    In the case of mandatory early repayment, a fee will be charged in respect of a penalty equal to 2% of the amount improperly formalized.

    Transactions can be executed with the credit institution throughout the whole of the year 2023 and the financing obtained will be compatible with any aid received from the autonomous communities and other institutions.

  • Línea ICO Garantía SGR/SAECA (Sociedad de Garantía Recíproca/Sociedad Anónima Estatal de Caución Agraria) 2023: (ICO Mutual Guarantee Society/State-owned Agricultural Surety Corporation Guarantee Line):

    Independent professionals, public and private enterprises and entities that have a guarantee or surety from a Mutual Guarantee Society or the State-owned Agricultural Surety Corporation, regardless of their registered office or tax domicile or of the nationality of their capital, can apply for these loans to make productive investments inside or outside Spain and/or to cover their liquidity needs.

    However, an entity applying for financing to make an investment outside Spain and/or to cover liquidity requirements must have in place a guarantee from a Mutual Guarantee Society or the State-owned Agricultural Surety Corporation, including both those domiciled in Spain and those which are domiciled abroad but have a “Spanish interest” 34.

    The application for the financing may be processed directly through credit institutions with which the ICO has executed a cooperation agreement for this product, vis-à-vis Mutual Guarantee Societies or vis-à-vis the State-owned Agricultural Surety Corporation. In fact, the Mutual Guarantee Society/State-owned Agricultural Surety Corporation and the credit institution itself to which the application is submitted will be responsible for studying, processing, approving and/or rejecting the transaction.

    The financing may be used for:

    1. Liquidity needs and, in particular, working capital needs to attend to operating expenses, payroll, payments to suppliers, purchase of goods, etc.
    2. Productive investments inside and outside Spain:
      • Acquisition of new or second-hand fixed assets.
      • Passenger cars and industrial vehicles.
      • Fitting out and refurbishment of installations.
      • Acquisition of businesses.

    The maximum amount that can be applied for is €2 million, in one or more transactions per client and year.

    The financing may be formalized in the form of a loan, leasing arrangement or line of credit and, when its intended purpose is “Investment”, up 100% of the project can be financed. The Mutual Guarantee Society/State-owned Agricultural Surety Corporation may decide the amount of the transaction to be guaranteed, which may be up to 100%.

    The client will be able to choose from among various repayment periods and grace periods, depending on the use to be given to the financing

    • Between 1 and 6 years, with the possibility of a grace period of up to 1 year for the repayment of principal;
    • Between 1 and 6 years, with the possibility of a grace period of up to 1 year for the repayment of principal;
    • Of 10, 12 and 15 years, with a grace period of up to 3 years.

    The foregoing will apply independent of the items that are to be financed.

    As regards the applicable interest rate, the client may choose between a fixed or variable rate. If the transaction is carried out at a variable interest rate, the rate will be reviewed half-yearly by the credit institution in accordance with the provisions of the financing agreement.

    The maximum annual cost of the transaction will the sum of the amount of the initial fee and the interest rate established by the credit institution, plus the cost of the Mutual Guarantee Society guarantee (without considering the application/opening fee applied to the client). This maximum annual cost may not exceed (i) the fixed or variable interest rate plus up to 2.3% for forward transactions equal to 1 year; (ii) the fixed or variable interest rate plus up to 4% for forward transactions of 2, 3 or 4 years; and (iii) the interest rate (whether fixed or variable) plus up to 4.30% for forward transactions equal to or over 5 years.

    As regards fees, the Mutual Guarantee Society or State-owned Agricultural Surety Corporation may charge a study fee of up to 0.50% of the secured amount of the transaction. In addition, the credit institution may charge a fee at the start of the transaction.

    In the case of voluntary early repayments, a fee will generally be charged equal to 1% of the amount cancelled where the transaction has been formalized at a fixed rate. A maximum fee of 0.5% will be charged where it has been formalized at a variable rate, depending on the residual life of the transaction on the settlement date of the repayment. In the case of mandatory early repayments, a fee will be charged in respect of a penalty equal to 2% of the amount improperly formalized.

    The Mutual Guarantee Society may charge the client at the start of the transaction a fee of up to 4% of the secured amount of financing in respect of a mutual entity membership fee which will be returned to the client when the relationship ends. The Statute-owned Agricultural Surety Corporation does not charge a mutual entity membership fee.

    The Mutual Guarantee Society, the State-owned Agricultural Surety Corporation and the credit institution will evaluate the application for financing and, having regard to the applicant’s solvency and the project’s viability, may require the provision of guarantees.

    Transactions can be executed throughout the whole of 2023 and the financing obtained will be compatible with any aid received from the autonomous communities and other institutions.

  • Línea ICO Crédito Comercial 2023 (ICO 2023 Commercial Credit Line)

    This credit line can be applied for by independent professionals and enterprises with registered office in Spain who (i) issue invoices arising from firm sales of goods and services to a debtor located within Spanish territory or (ii) have a supporting document agreed with another company with registered office in Spain whereby the purchasing company undertakes to acquire goods from the company applying for the financing.

    Specifically, such financing will be used to:

    • Obtain liquidity through the payment of advances on their billings in respect of their commercial activity within national territory; or
    • Cover prior production or manufacturing costs of goods or services sold in Spain.

    The advance payment of invoices with a maturity of not more than 180 days after the date of the transaction can be made. Similarly, pre-financing can be provided to meet the business’s liquidity needs to cover the costs of production and manufacturing of goods or services sold in national territory. The pre-financing operation must in any event be cancelled prior to formalizing an operation for the payment of advances on billings in respect of assets for which pre-financing was provided.

    Transactions are processed directly through credit institutions with which the ICO has executed a cooperation agreement for this product.

    Up to 100% of the amount of the invoice can be financed, provided that it does not exceed the maximum amount of €12.5 million of outstanding balance per client per year, in one or more installments.

    The financial institution and the client may execute the financing agreement that the parties freely agree upon.

    As regards the applicable interest rate, a variable interest rate will be applied, the conditions, dates and settlement method being those agreed upon with the credit institution in the corresponding financing agreement.

    The credit institution may establish a fee at the start of the transaction which, together with the interest rate set by the credit institution, may not exceed the maximum APR applicable to the transaction. In the case of a mandatory early repayment, a fee of 1% of the amount improperly formalized will be charged as a penalty.

    The Annual Percentage Rate (APR) applicable to the transaction will comprise the cost of the initial fee established by the credit institution plus the interest rate. The APR may not exceed the interest rate plus up to 2.30%.

    Transactions can be executed with the credit institution throughout the whole of the year 2023 and this financing will be compatible with other aid received from the autonomous communities or other institutions.

  • Línea ICO Red.es Acelera (ICO Red.es Accelerate Line)

    The beneficiaries of aid indicated in the calls for applications published by Red.es, such as companies, foundations, associations, professional associations, universities, technological centers and technological innovation support centers, etc., can apply for this financing.

    The financing can used for projects for which the grant of aid by Red.es is approved, in accordance with the rules of the relevant call for applications for aid. By way of example, these include:

    1. Experimental development projects, such as the creation of prototypes, the preparation of pilot projects or the testing and validating of new or improved products, processes and services in technologies such as artificial intelligence, 5G, mass data and information processing, blockchain, robotics, micro/nanoelectronics, 3D printing, digital content (specifically, the making available of data on a mass scale and in reusable formats, video games, audiovisual contents, etc.).
    2. Projects that foster the development, promotion and adoption of digital technologies that can stimulate demand, as well as the development of projects that drive growth and
      entrepreneurship in the technological field.

    The transactions will be processed directly through credit institutions that partner with the ICO in this product and such credit institutions will decide whether or not to grant the financing. Beforehand, the client must have obtained approval for the project and the grant of the related aid by Red.es, on the dates and the terms set in the relevant call for applications.

    The financing will take the form of a loan and may cover up to 100% of the amount of the project (less the amount of any advance payment if requested) with the following repayment and grace periods:

    • From 1 to 6 years with the possibility of a grace period of up to one year for the repayment of principal;
    • From 7 years with the possibility of a grace period of up to 2 years.

    As regards the applicable interest rate, the client can choose between a fixed and variable interest rate. If the transaction was formalized at a variable interest rate, the rate will be reviewed half-yearly by the credit institution in accordance with the provisions of the financing agreement.

    The credit institution may charge a fee at the start of the transaction, the cost of which, together with the interest rate, may not exceed the maximum APR that the credit institution may apply to the transaction according to its term. In addition, a fee for voluntary early repayment may be applied equal to 1% of the amount cancelled if the transaction has been formalized at a fixed rate. Where it has been formalized at a variable rate, the credit institution may apply, depending on the residual life of the transaction, a maximum fee:

    • Of 0.05% to transactions with a residual life of up to 2 years;
    • Of up to 0.15% to transactions with a residual life greater than 2 years and less than 5 years;
    • Of up to 0.15% to transactions with a residual life greater than 2 years and less than 5 years;

    In the case of mandatory early repayment, a fee will be charged in respect of a penalty equal to 2% of the amount improperly formalized.

    The Annual Percentage Rate (APR) applicable to the transaction comprises the cost of the initial fee applied by the credit institution plus the interest rate, and cannot surpass the following limits:

    • For 1-year forward transactions: Fixed or variable interest rate plus a margin of up to 2.30%.
    • For 2- and 3- or 4-year forward transactions: Fixed or variable interest rate, plus a margin of up to 4%.
    • For forward transactions of 5 or more years: Fixed or variable interest rate, plus a margin of up to 4.30%.

    Transactions can be formalized with the credit institution up to March 31, 2024 and the financing obtained will be compatible with the receipt of other subsidies or aid for the same eligible project originating from any government or public entity provided that the regulatory orders or legislation applicable in each case so permits.

  • ICO MITMA Sustainable Mobility

    This financing can be requested by beneficiaries of aid granted by the Ministry of Transport, Mobility and Urban Agenda (“MITMA” by its Spanish abbreviation) in calls for applications published pursuant to Order TMA/892/2021 approving the “Program for aid to municipalities for implementing low-emission zones and the digital and sustainable transformation of urban transport”, and to Order TMA/370/2022, approving the regulatory bases for the Support Program for Sustainable and Digital Transport.

    Specifically, this financing line is available, by way of example, to (i) municipalities, supramunicipal local entities that group together various municipalities and groupings of municipalities (in the case of the first program) and (ii) private legal persons or entities from the public enterprise sector that pursue an economic activity in the market related to the activities eligible for subsidies and which are validly incorporated in Spain (in the case of the second program).

    The financing may be used for projects for which the grant of aid by the MITMA is approved, in accordance with the provisions of the relevant call for aid applications. For illustration purposes, it can be:

    1. Program for Aid targeted at Municipalities; projects aimed at: (i) speeding up the implementation of low-emission zones, (ii) fostering modal change in urban and metropolitan environments toward more sustainable modes of transport, prioritizing collective public transport and active mobility so as to contribute to environment and health improvement objectives, (iii) fostering the transformation of public passenger and freight transport toward a zero-emission activity while improving system accessibility, and (iv) promoting the digitalization of the public transport service activity, resulting in greater system efficiency, better accessibility and benefits for public transport users.
    2. Support Programs for Sustainable and Digital Transport, projects that contribute to the following objectives: (i) interoperability of rail freight transport, (ii) fostering transport intermodality, (iii) renovation of freight railway equipment, (iv) safe, sustainable and connected road transport, (v) air and sea transport sustainability, and (vi) transport digitalization.

    The client must submit the application for financing to any of the credit institutions partnering with the ICO on this product. The credit institutions will ultimately decide on whether to grant the financing requested for projects obtaining MITMA approval. The client may ask the credit institution to pre-approve the financing subject to obtainment of the aid from the MITMA, although this will not be binding on the credit institution. The pre-approval granted will be notified to the MITMA.

    The financing will take the form of a loan or lease arrangement and may be for up to 100% of the amount of the project (less the amount of the advance payment made) with the following repayment and grace periods:

    • From 1 to 6 years with the possibility a grace period for principal of up to one year;
    • From 7 to 9 years with the possibility of a grace period of up to 2 years;
    • Of 10, 12, 15 and 20 years with a grace period of up to 3 years.

    As for the applicable interest rate, the client may choose between a fixed or variable interest rate. If the transaction was formalized at a variable interest rate, it will be reviewed by the credit institution every six months in accordance with the provisions of the financing agreement.

    The credit institution can apply a fee at the start of the transaction, the cost of which cannot exceed the maximum APR that the credit institution can apply to the transaction based on its term and additionally and optionally a fee of up to 0.25% of the amount formalized. In addition, the credit institution may apply a fee for voluntary early repayment in the amount of 1% of the amount cancelled if the transaction has been formalized at a fixed rate. If the transaction has been formalized at a variable rate:

    • ­No fee will be applied to transaction with a residual life of up to 2 years;
    • ­A fee will be applied:
      • Of up to 0.10% to transactions with a residual life of more than 2 years and less than 5 years;
      • Of up to 0.20% to transactions with a residual life of more than 5 years and less than or equal to 7 years;
      • Of 0.40% to transactions with a residual life of more than 10 years.

    In the case of mandatory early repayment, a fee will fall due in respect of a penalty equal to 2% of the amount improperly formalized.

    The Annual Percentage Rate (APR) applicable to the transaction will consist of the cost of the initial fee applied by the credit institution plus the interest rate, excluding the additional fee of up to 0.25% of the formalized amount, and the APR cannot exceed the following limits:

    • ­For transactions with a term of 1 year: Fixed or variable rate plus up to 2.30%.
    • ­For transactions with a term of 2, 3 or 4 years: Fixed or variable rate, plus a spread of up to 4.00%.
    • ­For transactions with a term equal to or greater than 5 years: Fixed or variable rate, plus a spread of up to 4.30%.

    The line will be valid until December 31, 2025 and will be compatible with Covid-19 guarantee lines and other European guarantee instruments provided that the conditions and deadlines required for them are specifically met.

    In addition, mention should be made of the Guarantee Lines also promoted by the ICO, including most notably, for 2023, the following:

  • Guarantee Lines for self-employed persons and enterprises pursuant to Royal Decree-Law 6/2022

    Pursuant to article 29 of Royal Decree Law 2/2022, of March 29, 2022, the Spanish government approved a Guarantee Line included in the Response plan for Russia’s war in Ukraine aimed at guaranteeing the liquidity of self-employed persons and enterprises in all the economic sectors hit by the economic effects of Russia’s war in Ukraine, except for the financial and insurance sector.

    The guarantees are aimed at insuring new financing transactions granted by financial institutions. Applications may be submitted up to December 1, 2023 by self-employed persons and enterprises that are not in a situation of default or subject to an insolvency proceeding as of the date of signature of the transaction, nor are subject to sanctions by the European Union, nor are subject at the time of the application to any guarantee enforcement procedure managed by the ICO.

    Up to 80% of the new loan transactions requested will be secured by the guarantee, for a term equal to the term of the loan granted and for a minimum of 10 years, up to a maximum amount of €2,000,000 as a general rule, €250,000 for primary enterprises producing agricultural products and €300,000 for fish farming and aquaculture, in one or more loan transactions.

    The maximum amount of the total loans secured per beneficiary, once the above thresholds have been exceeded, will be set on the basis of its average annual revenues or its energy costs in the past 12 months. However, under no circumstances may it exceed €150 million. In these loans, the guarantee may secure up to 80% of the amount of the loan for SMEs and self-employed persons and up to 70% for all other enterprises. The term of the guarantee will also coincide with the repayment period of the transaction, which will be up to eight years.

    All transactions will, at the debtor’s request, have an initial grace period for principal of 12 months and the financial institutions must keep open their clients’ working capital facilities until December 31, 2023. Financial institutions must apply best banking practices and customs for the benefit of their clients and may not condition the approval of loans on the acquisition by the client of any other service or product.

    Lastly, given its purpose, the ICO 2023 International, the lines relating to Exporters 2023, and the ICO International Channel 2023 line will be examined in section 7 below, on “Internationalization Incentives”.
    For more information in this connection, please see the ICO website.

34As a general criterion, ICO considers that there is a Spanish interest in the development of business activities or investments outside Spain if there is a direct or indirect participation of the Spanish company in the share capital of the foreign company holding the financing or if there are supplies, works or services provided by Spanish companies.