In Spain, the government has unveiled its burden-sharing scheme for banks to provide state-backed credit lines, aiming to assist companies in mitigating the impact of the coronavirus crisis. The initial tranche of 20 billion euros (18.4 billion pounds) is part of a broader 100-billion-euro package approved last week, forming part of an unprecedented 200-billion-euro relief effort.
Government spokeswoman Maria Jesus Montero emphasised that these measures are intended to help companies navigate the adverse effects of the ongoing health emergency, as Spain grapples with nearly 40,000 confirmed coronavirus cases and 2,696 deaths, making it one of Europe’s worst-hit countries.
The scheme includes guarantees covering around 80% of unpaid loans for self-employed individuals and small and medium-sized enterprises (SMEs), constituting the majority of Spanish businesses. These sectors will receive half of the initial tranche of credit lines.
For larger companies, the guarantees will cover 70% of potential losses from new loans and 60% of unpaid renewed credit lines, with the guarantees applicable for up to five years.
Although the interest rate policy on loans has not been finalised, Montero emphasised that the primary concern is not interest rates but rather risk sharing.
The Spanish initiative mirrors similar efforts in Germany, where the government is offering extensive loan guarantees through the KfW bank, tailored to support businesses of all sizes.
As European governments mobilise substantial spending packages to counter the economic impact of the pandemic, the European Central Bank has pledged emergency measures, including bond purchases exceeding a trillion euros and loans for banks to facilitate lending to small businesses.
The measures reflect a concerted effort by European authorities to bolster economic resilience amidst the unprecedented challenges posed by the coronavirus outbreak.
