(Adds official confirmation)
MADRID, Nov. 16 (Reuters) – The Spanish government will extend the availability of government-backed credit lines for six months through June, as well as extending loan terms and grace periods under the program, the economy minister said Monday, confirming an earlier Reuters report.
Separately, the Governor of the Bank of Spain, Pablo Hernandez de Cos, called for such support tools to be extended “as soon as possible” to avoid a credit crunch as the second wave of COVID-19 infections threatened recovery.
Economy Minister Nadia Calvino said at a press conference that the European Commission had approved an extension of the deadline for subscribing guaranteed loans to June 30 and that the government would take full advantage of this permit.
“In addition, we will make the most of what is permitted in contract terms and grace periods,” she said. The new conditions for state guarantees will be approved in a cabinet meeting on Tuesday.
Sources familiar with the matter had previously told Reuters that the guarantees on the credit lines intended to support companies in the economic crisis caused by the coronavirus would be extended from the originally planned five years for most loans to up to eight years.
They also said the grace periods would be extended for an additional year, which would allow borrowers to delay payments without paying late fees, defaulting, or getting their loans canceled.
With nearly 1.5 million cases and 40,769 deaths from COVID-19 and an economy heavily dependent on tourism, Spain is one of the hardest hit countries in Europe.
Companies had until December to apply for the existing state-guaranteed funding program of 140 billion euros (166 billion US dollars). The grace period for a significant amount of credit ends in April, and many small businesses fear that they will no longer be able to cope with their payments anytime soon.
The first line of € 100 billion approved in March guaranteed loans for five years, while the second line of € 40 billion approved in July guarantees loans for eight years. ($ 1 = 0.8447 euros) (Reporting by Jesus Aguado and Belen Carreno, writing by Andrei Khalip, editing by Hugh Lawson)