Special Information Briefing COVID-19 (No. 8): Key details on the first tranche of the Official Credit Institute’s guarantee facility for companies and self-employed individuals

On 26 March 2020, a Resolution of the Spanish Council of Ministers of 24 March 2020 was published, approving the details of the first tranche of the Official Credit Institute’s (“ICO“) guarantee facility for companies and self-employed individuals, to alleviate the economic effects of COVID-19 (the “Council of Ministers’ Resolution“).

The Council of Ministers’ Resolution implements one of the measures established in Royal Decree-Law 8/2020, of 17 March, on urgent extraordinary measures to deal with the economic and social impact of COVID-19 (RDL 8/2020). These measures consist of the approval of a guarantee facility on behalf of the State, for a total amount of up to EUR 100 billion, to guarantee the financial debt (existing or new) of companies and self-employed individuals with respect to financial institutions in relation to certain working capital and liquidity needs of such companies and professionals, as a means of mitigating the adverse effects of a liquidity crisis caused by COVID-19 (the “Guarantee Facility“) on the business community.

For further information on the measures included in the aforementioned RDL 8/2020, please consult our Information Briefing of 18 March 2020, which can be found here.

This first guarantee facility approved by the Council of Ministers is in keeping with the Temporary Framework of the State aid measures to support the economy in the face of the current COVID-19 outbreak, which was adopted by a Communication of the European Commission of 19 March 2020 (the “Temporary Framework“). The Guarantee Facility was declared to be compatible State aid by the Commission’s decision of 24 March 2020 (the “Commission’s Decision“), which was published yesterday.

The entire content of the Information Briefing can be found in the PDF.