Emergency fund reaches few Spanish companies

by Lorraine Williamson
emergency fund
del canto chambers 2

Barely one in twelve companies in Spain can claim a contribution from the emergency fund. The government has released €11billion to compensate for the consequences of the corona pandemic. 

This is evident by a calculation El País made with data from Axesor, the Spanish tax authorities and the Spanish Federation for Business CEOE. It is mainly companies that made use of the temporary unemployment scheme ERTE, which have access to the emergency fund. This means that only 180,000 of the 2.2 million companies in Spain will be compensated for the corona losses incurred. 

In addition, the aid is intended for only 95 of the 538 sectors of the Spanish economy. That’s less than 20%. Of all Spanish companies, only one in six is active in one of these 95 sectors. For the self-employed, this is the case for one in three companies. This is shown in the data from Axesor, a credit risk management company. 

Support for only five sectors 

Companies must have fulfilled all obligations for Seguridad Social and the tax authorities. Also , 2019 must also have been a profitable year. However, not even half of all companies in Spain meet the latter criterion. Only one in twelve companies can benefit from the €7billion (out of a total of 11 billion) that is paid out as direct aid by the Spanish government. In addition, there must have been a loss of turnover of at least 30% in 2020 and that was, on average, only the case in five of the more than 80 sectors. These sectors were;

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  • travel (with a turnover of – 75%)
  • tourist accommodation (- 68%)
  • aviation (- 60%)
  • bars and restaurants (- 43%)
  • film (-34%). 

According to a calculation by the CEOE, a turnover loss of at least €92billion within the unselected sectors remains uncompensated. Examples are;

  • car sales and repairs with a loss of €17.5billion in sales
  • construction (-€17.2billion)
  • car manufacturers (-€8.1billion)
  • metal (-€5.5billion)
  • advertising and market research with a loss of €3.5billion.

Because even within the selected sectors, certain industries can still be left out, the Spanish Alliance for Commerce and Hospitality has urged that all industries be included in the aid program. 

Wipe for the bleeding 

By attaching strict criteria to the emergency fund, the Spanish government wants to prevent money from disappearing to companies that were already struggling before the start of the corona pandemic. In any case, the viable businesses that qualify for the emergency fund will not receive large sums of money. Small and medium-sized entrepreneurs with up to ten employees receive a maximum support of 40% from anything above the first 30% loss of sales. For all other companies, that is 20% of everything above the first 30% loss of revenue. The minimum amount to be paid out is €3,000 for self-employed persons in small and medium-sized businesses and €4,000 for all other companies. 

Companies have to wait 

And then the question remains how long it will take before the awarded compensation is paid out to the companies. The call for urgent government support has been strong since October last year. However, because the money must first be divided among the different regions, it may not be distributed to the ailing companies until the summer. 

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