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6. Preferred 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 2021: (i) Enterprises and Entrepreneurs; (ii) Mutual Guarantee Society/State-owned Agricultural Surety Corporation Guarantee; (iii) Commercial Credit; (iv) Red.es Accelerate; (v) Tourism Industry and connected activities Covid 19/Thomas Cook; (vi) Exporters 2020; (vii) International Tranche 2021 I “Investment and Liquidity”; (viii) International Tranche 2021 II “Medium and Long-term Exports”; and (ix) International Channel 2021, whose most notable characteristics are:

  • Línea ICO Empresas y Emprendedores 2021 (ICO Enterprises and Entrepreneurs Line):

    Among others, independent professionals and public and private enterprises - both Spanish and foreign - 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 wil 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.

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

    1. Between 1 and 6 years, with a grace period of up to one year for the repayment of principle.
    2. Between 7 and 9 years, with a grace period of up to two years.
    3. 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%.

    Transactions can be executed with the credit institution throughout the whole of the year 2021.

  • Línea ICO Garantía SGR/SAECA (Sociedad de Garantía Recíproca/Sociedad Anónima Estatal de Caución Agraria) 2021 (ICO Mutual Guarantee Society Guarantee/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 be domiciled in Spain or its capital must be at least 30% Spanish owned.

    These transactions will 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.

    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.
      • Formation of businesses.

    The maximum amount that can be applied for is 2 million euros, 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:

    1. Between 1 and 6 years, with the possibility of a grace period of up to 1 year for the repayment of principal.
    2. Between 7 and 9 years, with the possibility of a grace period of up to 2 years.
    3. 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.

    The Mutual Guarantee Society, the State-owned Agricultural Surety Corporation ant 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 2021.

  • Línea ICO Crédito Comercial 2021 (ICO 2021 Commercial Credit Line)

    These loans can be applied for by independent professionals and enterprises with registered office in Spain who seek to:

    • Obtain liquidity through the payment of advances on their billings in respect of their commercial activity within national territory.
    • 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 euros of outstanding balance per client per year, in one or more installments.

    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.

    Transactions can be executed with the credit institution throughout the whole of the year 2021.

  • 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, for example, companies, foundations, associations, professional associations, universities, technological centers and technological innovation support centers, etc., can apply for these loans.

    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 products in technologies relating to artificial intelligence, 5G, mass data and information processing, blockchain, robotics, micro/nanoelectronics, 3D printing, digital content, 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.

    Up to 100% of the amount of the project can be financed, less the amount of any advance payment of the aid, if requested.

    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 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.

    Mention should also be made of the Guarantee Lines also offered by the ICO, including most notably, for 2021, the following: (i) Guarantee Line for independent professionals and enterprises pursuant to Royal Decree-Law 8/2020, and (ii) Guarantee Line for Investment pursuant to Royal Decree-Law 25/2020.

  • Guarantee Line for independent professionals and enterprises pursuant to Royal Decree-Law 8/2020

    Pursuant to the provisions of Royal Decree-Law 8/2020, of March 17, 2020, a special Guarantee Line has been approved to help businesses cope with the exceptional circumstances brought about by the COVID-19 crisis. This Guarantee Line is aimed at facilitating access to credit and providing liquidity to enterprises, independent professionals and SMEs.

    Specifically:

    1. First tranche, activated by the Resolution adopted by the Council of Ministers on March 24, 2020: €20 billion, split into two subtranches:
      • Up to €10 billion for renewals and new loans granted to independent professionals and SMEs.
      • Up to €10 billion for renewals and new loans granted to enterprises which do not have SME status.
    2. Second tranche, activated by the Resolution adopted by the Council of Ministers on April 10, 2020: an additional €20 billion for renewals and new loans granted to independent professionals and SMEs.
    3. Third tranche, activated by the Resolution adopted by the Council of Ministers on May 5, 2020: an additional €20 billion to guarantee loans to independent professionals, SMEs and enterprises; €4 billion to guarantee up to 70% of issues of promissory notes by non-financial enterprises on the Alternative Fixed-Income Market (MARF); and €500 million to reinforce, up to 80%, the guarantees granted by Compañía Española de Reafianzamiento (CERSA) and to increase the capacity of the mutual guarantee societies of the autonomous communities.
    4. Fourth tranche, activated by the Resolution adopted by the Council of Ministers on May 19, 2020: €20 billion for renewals and new loans granted to independent professionals and SMEs.
    5. Fifth tranche, activated by the Resolution adopted by the Council of Ministers on June 16, 2020: €7.5 billion for renewals and new loans granted to independent professionals and SMEs; €5 billion for renewals and new loans granted to other enterprises; €2.5 billion to meet the financing needs of independent professionals and SMEs in the tourism industry and connected activities; and €500 million for the acquisition or lease (finance or operating) by enterprises or independent professionals of ground transportation vehicles for professional use.

    This State Guarantee Line for enterprises and independent professionals from the Ministry of Economic Affairs and Digital Transformation will be managed by the ICO through financial institutions that grant financing to enterprises and independent professionals to mitigate the economic effects of COVID-19, thereby ensuring liquidity and covering their working capital needs in order to maintain production and employment.

    Specifically, this Guarantee Line covers new loans and other forms of financing as well as the renewals of loans already granted by financial institutions to meet financing needs such as (i) wage payments; (ii) unsettled invoices from suppliers; (iii) rent for premises, offices and facilities; (iv) utilities expenses; (v) need for working capital; and (vi) other liquidity needs including those arising from financial or tax obligations that have fallen due. However, this Line cannot be used for loan consolidation or restructuring or the cancellation or prepayment of pre-existing debts.

    Enterprises and independent professionals from any business sector that have their registered office in Spain and that have been affected by the COVID-19 economic crisis can avail themselves of this Line, provided that:

    • The loans and transactions have been formalized or renewed on or after March 18, 2020.
    • The enterprises and independent professionals: (i) are not in default according to the files of the Bank of Spain's Risk Information Center (CIRBE) as of December 31, 2019; (ii) are not subject to insolvency proceedings as of March 17, 2020, either because they have filed an insolvency petition, or because the circumstances referred to in article 2.4 of Insolvency Law 22/2003, of July 9, 2003, exist for an insolvency order to be requested by their creditors; or, (iii) where the European Union’s State Aid Temporary Framework applies, they do not qualify as a distressed enterprise as of December 31, 2019 in accordance with the criteria set out in article 2(18) of Commission Regulation (EU) No 651/2014 of June 17, 2014 declaring certain categories of aid compatible with the internal market.

    Financial institutions can apply for the guarantee for loans and transactions signed with independent professionals and enterprises that are formalized or renewed on or after March 18, 2020. With the approval of Royal Decree-Law 34/2020, of November 17, 2020, and the Resolution adopted by the Council of Ministers on November 24, 2020, the period for applying for guarantees is extended to June 1, 2021.

    In addition, the expiration period of guarantees for transactions formalized before November 18 may be extended for a maximum period of 3 years, provided that the total of the guaranteed transaction does not exceed 8 years from the initial formalization date of the transaction. A request can also be made to extend the grace period for repayment of the principal of the guaranteed financing transaction by an additional 12 months at the most.

  • Guarantee Lines for Investment pursuant to Royal Decree-Law 25/2020

    Pursuant to the provisions of Royal Decree Law 25/2020, of July 3, 2020, a Guarantee Line of €40 billion has been approved to secure the financing granted to enterprises and independent professionals aimed mainly at meeting their financing needs stemming from new investments.

    Specifically:

    1. First tranche, activated by the Resolution adopted by the Council of Ministers on July 28, 2020: €8 billion, split into two subtranches:
      • Up to €5 billion to secure the financing granted to independent professionals and SMEs to meet their liquidity needs and, in particular, those stemming from new investments, granted to independent professionals and SMEs.
      • Up to €3 billion to secure the financing granted to enterprises that do not have SME status to meet their liquidity needs and, in particular, those stemming from new investments.
    2. Second tranche, activated by the Resolution adopted by the Council of Ministers on November 24, 2020: an additional €2.55 billion to secure financing transactions for enterprises and independent professionals that are in the execution phase of an arrangement with creditors within an insolvency proceeding, but that are up to date with their obligations in accordance with the arrangement and can prove it with a report from the court or the insolvency manager.

      A subtranche of €50 million is also included to secure issues of promissory note programs on the MARF.

    3. Third tranche, activated by the Resolution adopted by the Council of Ministers on November 24, 2020: an additional €250 million to secure promissory notes issued on the MARF by enterprises that could not avail themselves of the tranche made available in the first Line since their promissory note program was in the renewal phase.
    4. Fourth tranche, activated by the Resolution adopted by the Council of Ministers on December 22, 2020: €500 million, aimed at securing the financing granted to SMEs and independent professionals in the tourism and hospitality industry and connected activities to meet their needs stemming from new investments, as well as liquidity needs.

    This State Guarantee Line for enterprises and independent professionals from the Ministry of Economic Affairs and Digital Transformation will be managed by the ICO through financial institutions that grant financing to enterprises and independent professionals to meet their financing needs stemming from new investments.

    Specifically, this Guarantee Line seeks to foster and support the grant of fresh financing to independent professionals and enterprises by financial institutions so that such independent professionals and enterprises can make new investments in Spain, aimed at (i) adapting, extending or renewing their production and service capacities, or (ii) restarting or reopening their business.

    The financing obtained by independent professionals and enterprises must be used for one or more of the following purposes: (i) new investment within Spain, including current and capital expenses linked to the investment, provided that the latter are justified; (ii) investment and/or current and capital expenses aimed at extending, adapting or renewing production or service capacities; (iii) investment and/or current and capital expenses aimed at restarting or pursuing the business; (iv) current and capital expenses associated with or aimed at, among others, acquiring, renting, leasing – under a finance or “renting” arrangement – equipment, machinery, facilities, supplies of materials and goods and services related to the investment and/or activity of the enterprise; and (v) billing needs arising, among others, from wage payments, invoices or current maturities of financial or tax obligations. However, this Line cannot be used for loan consolidation or restructuring or the cancellation or prepayment of pre-existing debts.

    Enterprises and independent professionals from any business sector that have their registered office in Spain and that have been affected by the COVID-19 economic crisis can avail themselves of this Line, provided that:

    1. The loans and transactions have been formalized or renewed on or after July 29, 2020.
    2. The enterprises and independent professionals: (i) are not in default according to the files of the Bank of Spain's Risk Information Center (CIRBE) as of December 31, 2019; (ii) are not subject to insolvency proceedings as of March 17, 2020, either because they have filed an insolvency petition, or because the circumstances referred to in article 2.4 of Insolvency Law 22/2003, of July 9, 2003, exist for an insolvency order to be requested by their creditors; or, (iii) where the European Union’s State Aid Temporary Framework applies, they do not qualify as a distressed enterprise as of December 31, 2019 in accordance with the criteria set out in article 2(18) of Commission Regulation (EU) No 651/2014 of June 17, 2014 declaring certain categories of aid compatible with the internal market.

    Financial institutions can apply for the guarantee for loans and transactions signed with independent professionals and enterprises that are formalized or renewed on or after July 29, 2020.

    As regards the period for applying for guarantees, with the approval of Royal Decree-Law 34/2020, of November 17, 2020, and the Resolution adopted by the Council of Ministers on November 24, 2020, this period is extended to June 1, 2021.

    The maximum percentage of coverage of the guarantee varies according to who applies for it:

    1. In the case of independent professionals and SMEs, the guarantee will amount to a maximum of 80% of the transaction.
    2. For other enterprises that do not have SME status, the guarantee will cover 70% of the principal of the transaction at the most.

    Lastly, the term of the guarantee issued will coincide with the term of the transaction up to a maximum of 8 years. However, for transactions subject to de minimis rules, the maximum term will be up to 5 years.

Lastly, given its purpose, the ICO 2020 International, Tranche I “Investment and Liquidity” Line, the lines relating to Exporters 2020 and International 2020 Tranche II “Medium- and Long-term Exporters”, and the ICO International Channel 2020 line will be examined in section 7 below, on “Internationalization Incentives”.

For more information in this connection, please see the ICO website.