The first self-employed rebellion against debts derived from the pandemic are starring the taxi drivers of Barcelona, in whose group Elite Taxi the spark jumped in autumn. And not fire, but paper: a form entitled “request for modification of the loan contract” began to circulate among Barcelona drivers, who share it and download it from the Google cloud.
“I come to request the modification of the indicated loan contract based on the substantial alteration of economic circumstances …”, says the document. The recipient is always a bank or finance company. Taxi drivers are renegotiating the loans they signed for car and license “in application of the so-called clause matters standing, recognized by the jurisprudence of the Supreme Court ”, say his letters.
“In general, the bank is agreeing to renegotiate. And thank goodness -he says Tito Alvarez, leader of Elite Taxi-, because we got to raise demonstrations at the doors of the branches. The pandemic had stopped everything, there was no tourism, billing fell by 70%, but the receipts kept coming. I was seeing people very burned, overwhelmed, even thinking of getting out of the way “.
Taxi drivers, an emblematic tribe of the self-employed, have found a paper parapet to cover their part in the 65,000 million euros that self-employed workers have lost in Spain in the first year of the pandemic. The figure is from the Covid-19 Barometer of ATA, the main association of freelancers. In that forum, they estimate that almost all of these losses have already been transformed into debt, because most small entrepreneurs have no financial cushion, or no other way out than to get trapped … or defer payment to another self-employed person.
The Barcelona taxi drivers’ document has been extended to drivers from other cities. They are one of the self-employed groups most crushed by debts, newspapers (fuel, maintenance, taxes) and those of the car and the license that they acquired on the basis of transfer and mortgage.
There is no equal initiative among the other self-employed hardest hit, the hoteliers, despite the fact that, between confinements, they have generally been without income since March 2020.
In the study ‘The impact of the covid-19 crisis on the financial situation of Spanish SMEs ”-presented on February 18 by Oscar Arce, Director of Economics and Statistics of the Bank of Spain- the hotel industry leads the vulnerability to the specter of insolvency. 68% of bars, restaurants and entertainment venues are considered “vulnerable” based on their net debt, that is, “they have positive net debt and zero or negative results,” explains the report, which includes in the same situation 40% of small transport and storage firms.
They are not small percentages. “The self-employed Spanish is afraid of failure, and will trap the family, and if he is desperate it will even pull a card with very high interest –Adventure the economist Janira Benages, from the law firm CCB Sin Deudas BCN-. The bankruptcy is not a real solution for him, because it does not help to deal with the debt with the Treasury and Social Security. We are the only country in Europe where administrations do not negotiate defaults ”.
The 2020 losses among the self-employed can be staggering. At an estimate of 70 billion, Maria Jose Landáburu, Secretary General of the Union of Associations of Self-Employed Workers and Entrepreneurs (UATAE), adds the problem of late payment: “This year the self-employed are creditors of other self-employed, and the small ones are victims of the large ones because the payment law it does not have a sanctioning regime for suppliers, and it does not punish those who delay their payment ”.
Like a hurricane
“There comes a time when you close the premises, your employees end up looking for life and you barricade yourself at home with the minimum,” says, pointing to the Via Numantina, the Madrid hotelier Isidoro Sanchez. When he attends EL PERIÓDICO he is coming out of a coma after several ups and downs of the blind of his discobar Huertas 41, in the Barrio de las Letras in Madrid.
When the coronavirus arrived, he was thinking of expanding and opening another store. Now he comes across a song in his teeth if on the nights the Municipal Police visit his business and measure the distance between tables, a fine does not spoil his box for the month. “This crisis is more unfair than the one in 2008,” says Isidoro. In that one, if you made a mistake, the market penalized you; this is more as if a hurricane had happened, and everything is very arbitrary ”.
He says it because he has just come from an ankle cast at the Villalba Hospital, 40 kilometers from Huertas Street, and he has seen the tables in the polyclinic cafeteria that are closer together than in his discobar. Comparative Tort and the Threat of Debt they have soured the atmosphere of the business: “Now in this sector the suppliers of soft drinks no longer forgive more than a month. And there are no others to choose from ”, he says.
Isidore would rather be zombified than borrow. From the crisis of 2008, he drew a maxim to apply to the letter after having lived the experience of responding with personal assets to the company’s debts: “Do not go into debt to pay debts; that makes no sense”.
The aid that the Government has announced will be a consolation… but not for everyone. The State Confederation of Small and Medium Enterprises, CEPYME, has warned that the concession excludes 53% of the businesses.
Around the first hose of aid, the ICO loans, the UATAE has kept open for months a portal of complaints from its partners against tricks of financial institutions. “We received a barrage of complaints – María José Landábur says – because some banks have done what they wanted with the guarantee of 75% of the State, such as placing the self-employed who requested ICO credit products related to the loan, insurance, refinancing of previous debts … they have made a perverse use of the intention that this help had ”.
The debt swirls in the corners of the premises closed by the crisis, sometimes nothing metaphorically, because that is where the letters of the creditors of the business that have struck the blind end.
“It is normal for debt to be generated,” says Landáburu- because the benefit for termination of activity is used by the self-employed to live and feed the family but, in the meantime, the rent payments, the terms of the van, continue to pile up. the calls from the suppliers … There is no moratorium on that, not even the rent if the premises are not owned by a large fork ”.
The state helps, and at the same time condemns. In Benages’ office they are running into “the problem of many freelancers, especially in the hospitality industry, who have had to close but their debt is still alive with the administrations, who say a lot that they are going to help, but close the doors to any agreement . The Administration has the power to seize your account. We are seeing freelancers who, as soon as they manage to collect something from a client, the Treasury and Social Security take what they received, without possible agreement ”.
The legal and compassionate delay of the obligation to file bankruptcy gave rise to a first definition in this crisis of the “zombie” company: one that would have already collapsed under the weight of its losses and debts if it were not for the moratorium.
But the moratorium generates artificial, vegetative life; and not a little. A study by Iberinform -society de Crédito y Caución, the largest credit insurer in Spain- ensures that 17.6% of the business fabric has turned into a zombie. In 2019, before the covid, 9.2% were in that situation.
At this stage of the covid crisis, some SMEs will do whatever it takes to get more oxygen from the bank. Even going back to 90s behaviors to cover unstitches. A Madrid-based recovery veteran is well aware of this who, having been threatened by professional defaulters, asks that his name not be published: “I have known companies that they have withdrawn money B of the drawer to cover their debts Although it is a nonsense, thus they make up their results to be able to appear before the bank to request new credits ”.
Eddie is an Australian news reporter with over 9 years in the industry and has published on Forbes and tech crunch.