The COVID-19 pandemic has led to a significant reduction in the income of many companies and self-employed workers. Through the Code of Good Practices, the aim is to articulate a way for financial institutions to continue supporting companies and the self-employed, with the aim of facilitating the continuity of those businesses that, although viable, have experienced a deterioration in their financial situation as a result of the pandemic.
To this end, the Resolution of 12 May 2021, which approves the Code of Good Practices, indicates that the institutions that adhere to this Code undertake to adopt the following measures:
- Extend the maturity of financing operations that have received a public guarantee. Certain requirements contained in the Resolution dated 12 May 2021 must be met, but the request, which must be made by the debtor to the bank, was until 15 October 2021.
- The creditor entity will consider the possibility of converting the financing operations with public guarantee into participative loans not convertible into capital.
- The institution shall consider reducing the outstanding principal amount of the publicly guaranteed financing operations. In the event of such principal reduction, the institution may claim from the guarantor that it be paid the part of the amount by which it has been decided to reduce the outstanding principal of the operation that was covered by the guarantee, while it shall be responsible for reducing the non-guaranteed part in the proportion that corresponds to it.
Making transfers to reduce the nominal amount of publicly guaranteed loans is an innovative measure within the European Union. This will allow companies and the self-employed who require a reduction in the nominal value of their debt to have access to it, subject to an agreement with the institution.
The financial institution must assume a reduction in the outstanding principal of the loan equivalent to at least the percentage of the loan not covered by the guarantee for the amount by which the outstanding principal of the loan is reduced.
Requirements: tax certificate of compliance, the debtor’s profit and loss account for 2020 shows a negative after-tax result, and turnover has fallen by at least 30% in 2020 compared to 2019. Not to be convicted by final judgement for offences against the Public Treasury and Social Security.
In general: transfers may not exceed 50% of the outstanding guaranteed principal amount of each operation. The transfer may be up to 75% of this amount in the event of a drop in turnover in 2020 with respect to 2019 of more than 70%.
Payment of aid is limited to the exhaustion of funds (€3 billion).
Deadline: 1 December 2022
In addition to the above, the financial institutions undertake to maintain the limits and conditions of the working capital lines granted to all customers until at least 30 September 2022. In the event that any of the measures set out in the three previous points are implemented, the financial institution undertakes to maintain the working capital lines until 30 June 2023.