The Generalitat Valenciana asked the Spanish government direct non-refundable aid to families, businesses and SMEs or loans that do not entail any cost for those affected by the floods, since the ICO funds that the government of Pedro Sánchez activated “must be returned with the interests determined by the banks.
This was announced by the spokesperson and advisor of the Treasury of the Valencian Community, Ruth Merinoswho criticized the fact that “the ICO funds will cover the bank that launches them and not the individuals, SMEs and businesses that were affected by DANA”. “The Valencians What they need is help, not more debt.“, indicated the Generalitat in a press release.
The Treasury Minister explained that the ICO guarantee line announced this week by the central government “is not direct aid to victims but an advance payment of the aid and compensation that corresponds to them, and access to these loans will result in a rigged cost for the victims.
With this financial instrument, equipped with 5 billion eurosstressed that the Sánchez Government will provide the State guarantee for loans granted by financial entities to those affected as an advance on the aid and compensation that they are to receive from the Insurance Compensation Consortium, so that this amount “does not represent direct aid for the victims, but a guarantee solely intended to facilitate access to credit through the participating financial entities, which are those that provide the liquidity”, underlined Merino.
The advances and credits to which they are linked they must be returned for those affected with corresponding interests, added the autonomous administration. The interest rate applied to these operations is set by the lending financial institutions themselves without the ICO establishing any limitations.
In addition to the guarantees granted for advance aid and compensation loans, the ICO envisages a line of guarantees to finance investments or working capital and, in these cases, financial entities could ask the holders of these operations for additional guarantees to those provided by the State.
ICO Credits
This type of help represents a danger for those who are not used to managing the interest on a loan: especially after losing everything. In fact, the unpaid credit that the government of Pedro Sánchez has granted to companies is around 3%, despite the moratorium on the repayment of these loans until 2025.
Those who wish to request this type of financing can do so through the bank, and the credits will have the guarantee of the ICO -the equivalent of the State-. The idea is that they benefit from more favorable terms, but the reality is that, although the interest rate is actually lower than that of a personal loan, the cost is not negligible.
According to the ICO itself, the interest on these credits varies between 5% and 6.7%, this is what would be charged to those who need it because they were affected by DANA. A slab higher, for example, than the average mortgage rate, which is 3.30% according to the INE -National Institute of Statistics-.
After the Covid-19 crisis, ICO credits forced close many businesses for, although they were saved for the moment, generated interest that they could not afford in the long termbecause the company not only had to recover, but also generate more to pay more.
