Terms and conditions of the new facility to cover liquidity needs in the context of the war in Ukraine
On May 10, 2022, the Spanish Council of Ministers agreed to release the first tranche (of €5 billion) of the guarantee facility created under Royal Decree-Law 6/2022 to mitigate the liquidity constraints generated in the context of the war in Ukraine.
This guarantee facility, which is subject to the Temporary Framework for State aid measures to support the economy following the aggression against Ukraine by Russia (the "Temporary Framework"), will become effective when the European Commission grants its authorization.
The primary purpose of the facility is to cover the principal of new loans for eligible companies and self-employed workers with registered offices in Spain that are affected by the economic impact of the war in Ukraine (due to the increase in energy, raw material and electricity prices).
The new facility mirrors the "COVID" guarantee facilities created under Royal Decree-Law 8/2020 and Royal Decree-Law 25/2020 in terms of structure and operation, although the guarantee applications of this facility may be based on measures relating to the limited amount of aids provided in section 2.1 of the Temporary Framework, or on the measures in the form of public guarantees provided in section 2.2 of the Temporary Framework. Accordingly, certain distinctions are made as to their basic terms and conditions:
Guarantees granted under Section 2.1 of the Temporary Framework:
> Maximum guaranteed nominal amount of €400,000 (or €35,000 in the agricultural, aquaculture and fisheries sector)
> Maximum 10-year duration of the guarantee and of the loan
> Maximum guarantee coverage of 80% of the loan principal
> Guarantee premiums of 20 bp
Guarantees granted under section 2.2 of the Temporary Framework:
> Maximum loan amount per beneficiary: the greater of i) 15% of the average total annual turnover over the last 3 closed accounting periods, or ii) 50% of the energy costs over the 12 months preceding the application for the guarantee
> Maximum 8-year duration of the guarantee and of the loan
> Maximum guarantee coverage of 80% of the loan principal for SMEs and self-employed workers, and 70% for other companies
> Guarantee premiums increase progressively over the term of the transaction. Between 20 and 188 bp for SMEs and self-employed workers, and between 30-285 bp for other companies
In all cases, loans may have an initial grace period of up to 12 months.
Applications must be filed by December 1, 2022, and the deadline for granting the guarantees is December 31, 2022.
The financial institutions benefiting from the guarantees will assume certain commitments similar to those provided for the "COVID" guarantee facilities (relating to the marketing of linked products, the application of costs and fees and the maintenance of working capital facilities for customers).