The consequences of COVID-19 continue to be noted in the Spanish economy, but a few autonomous days ago, entrepreneurs and companies received positive news to be able to alleviate the effects that the pandemic has had on their businesses.
As we have already advanced in our blog, the Spanish Government approved a fund
of direct aid to freelancers and
SMEs totaling 7 billion euros. This funded grant lost in 2021 serves at least as an economic injection after a very difficult year for many companies.
Not for nothing does the support plan entail direct aid of between EUR 3 000 and EUR 200 000.
Compensation will be awarded for a drop in turnover of at least 30%compared to 2019 in the sectors most affected by the restrictions.
We went on to offer you all the information in detail, but remember that you can count on
AYCE Laborytax job advisory team to apply for these aids.
What is a lost fund grant?
Before going into detail about the types of aid that companies will be able to receive, it is important to clarify what a lost fund subsidy is and how it can impact the continuity of a company.
Lost-fund loans are financial aid received by companies that deserve special protection.
As it is a financing instrument to protect companies, it does not imply a return, provided that the final destination of the companies is justified.
That is, they are subsidies that, in this particular case, provided by the Government to safeguard the continuity of many companies after an exceptional situation, such as that suffered in 2020 by the COVID-19 pandemic.
Types of funded grants lost
This aid plan which the Spanish Government has implemented is equated with the initiatives that other countries of the European Union have been adopting since the beginning of the pandemic to compensate businesses affected by administrative restrictions.
It is important to emphasize that these lost fund grants for entrepreneurs are of a finalist nature,that is, they must be used to pay bills and debts of supplies, suppliers and payroll.
But how are these aids distributed?
Within the $11 billion package so that no viable Spanish company is left behind in the final stretch of this pandemic, the funds will be divided in three ways.
- On the one hand, 7 billion are direct aid for self-employed people and SMEs.
- Another $3 billion to restructure ICO credit debt.
- EUR 1 billion to recapitalize medium-sized enterprises.
Defining this lost aid package has not been easy. The Government wished to maintain the role of management by the autonomous communities,with particular attention in the distribution to the Canary Islands and the Balearic Islands for the weight of tourism, which will receive 2 billion of the 7 000 provided for in direct aid.
Another question to be solved is as follows. Can any company access this lost equity grant? Not in principle.
Government-approved lost fund subsidies are intended for self-employed persons and SMEs whose activity has been adversely affected by the pandemic.
As set out in the BOE, these aids are intended to serve viable enterprises that are vulnerable as a result of falling revenues or increased indebtedness from COVID-19 in those sectors most affected.
The maximum aid to be granted shall be:
- For entrepreneurs or professionals applying the direct estimation regime in the IRPF, as well as permanent entities and establishments with a maximum of 10 employees:aid of up to 40% of the fall in the volume of operations in 2020 compared to 2019.
- For entities, entrepreneurs or professionals and permanent establishments with more than 10 employees:aid of up to 20% of the amount of the fall in the volume of operations in 2020 compared to 2019.
Requirements for access to these lost fund capital grants
Lost fund grants for entrepreneurs will be available until the end of 2021.
The Tax Agency will control that the requirements to access the aid are met, which are to demonstrate a drop in revenue above 30% compared to 2019. It will also be essential to have obtained a net positive result in 2019.
Micropymes and freelancers,on the other hand, could cover 40% of thatloss, with a maximum of 3,000 euros for self-employed people who pay for modules and up to 200 000 for the rest.
In addition, beneficiaries will have to meet the following requirements:
- Companies have to maintain their business until June 2022.
- Don’t raise executive salaries.
- Do not distribute dividends.
- Have no activity in tax havens.
- Be aware of all your payments to Social Security and the Tax Agency.
It is important to highlight these five points, as the objective of these aids is to strengthen the solvency of companies in order to have greater production and employment capacity over the coming years.
How do I apply for these grants for entrepreneurs?
Although the aid has been proposed and approved by the Spanish Government, it will be managed directly by the autonomous communities.
The allocation of funds will be carried out according to the same criteria as those used for the React-EU:impact of the pandemic on the wealth of autonomous communities, impact of the crisis on unemployment and impact on youth unemployment.
The distribution by territories (remember that 2 billion is for the Canary Islands and the Balearic Islands alone, and 5 000 for the rest) can affect the amount that effectively reaches the self-employed and companies, as funds are exhausted in each Community.
these lost fund grants for women entrepreneurs as well as entrepreneurial men should serve to deal with debt payments and make payments to suppliers and other creditors, financial or non-financial, as well as fixed costs, provided those debts have accrued as of March 1, 2020. It is not essential to have had an ICO-supported credit over the past year.
Which companies and freelancers will be able to apply for these grants thoroughly lost?
Only those belonging to the sectors most affected by the pandemic: hospitality and catering,sectors with access to ERTE by coronavirus expanded in Royal Decree-Law 2/2021, and others especially affected by the pandemic, such as the activities of the manufacturing industry related to the trade and trade hospitality; wholesale and retail; sectors transport; aeronautical maintenance,and activities related to the culture and culture sports activities.
All information is contained in Royal Decree-Law 5/2021,of 12 March, of extraordinary measures to support business solvency in response to the COVID-19 pandemic, published in the Official Gazette of the State.