Entrepreneurs who have seen their businesses falter due to the pandemic, especially after the restrictions of the second and third waves of the coronavirus, they will have to wait even longer to qualify for any of the grants that the Government was going to approve tomorrow in the Council of Ministers. Because now everything indicates that the Ministry of Economy will wait another week to raise the decree to the consideration of the members of the cabinet, given the complexity of the proposals that will be included and after a new scuffle with the partners of United We Can.
The department headed by Nadia Calviño has been working for weeks on the definitive proposal of the support plan that Economy has been negotiating with the agents involved, such as financial institutions, as well as with communities and autonomous communities and after the authorization of the European Commission to open the door to carry out this expenditure. It will be 11,000 million euros, as announced by the President of the Government, Pedro Sánchez. But the amount that will go to direct subsidies is still unknown, the corporate debt restructuring plan and the rescue fund for SMEs in difficulty.
When everything seemed to indicate that it would be this Tuesday when La Moncloa approved the plan, after a year of hardships for many businesses, government sources admit that it will not be this week, but predictably the next. The delay will mean that the aid does not materialize in practice until the second quarter of the year is well advanced, faced with another complexity, that of starting it up and getting the money to those who need it, complying with all administrative controls.
In principle, the claim is that entrepreneurs who have seen their income collapse during the first year of the pandemic and the economic crisis will be able to receive public aid to sustain their businesses with injections of liquidity that will help them to face a good part of the fixed costs that they have every month, such as rent or receipts (electricity, water, gas, etc.). That is the idea of the decree that the Ministry of Economy keep tuning at this time.
The promised direct aid would provide support for entrepreneurs to cope up to 70% of fixed costs that they have on a recurring basis, although in some cases they could reach 90%, according to government sources. To access this support, the company should demonstrate that it has had a decrease in its income from up to a third of its turnover in 2020 compared to the one registered a year earlier.
However, the internal processing of this decree has caused friction again within the Executive. The vice presidency of Pablo Iglesias considers it a priority to concentrate most of the mechanism on the part of direct aid to companies. That is represent at least 8,000 of the 11,000 million provided in the mechanism. For now, the Economy has not clarified what percentage of that plan would go to direct subsidies to entrepreneurs, although sources from the department led by Nadia Calviño point out that it will be a good part, without specifying it. From that social vice presidency they consider that the measure of the restructuring of the credits will only benefit companies that chose to borrow using those loans.
Among the members of the United We Can Executive Branch, they are pressing for it to also be essential that these aids are accessible to all companies, regardless of the sector to which they belong. Because one of the ideas that Economía works with is to focus them on the businesses most affected by the latest restrictions derived from the second and third waves, such as tourism and hospitality. In the purple formation they point out that, if so, would leave unattended other companies that have experienced steep billing drops, such as those linked to those tourism and hospitality sectors, but they are not technically embedded in them.
Iglesias also wants those aids to remain regulated in a state regulation and that they are homogeneous among all the autonomous communities. This is, that the money is not transferred to the regional governments so that they are the ones that grant the aid, as the Ministry of Economy had planned. The objective was to channel that money through the territories, although the complexity of the process means that this issue has not yet been defined. In Economics they seek “the most efficient way” so that the aid arrives quickly and in an agile way to those who need it.
In Unidos Podemos they also require Economy that the aid be conditional on certain public policy objectives, to avoid abuses by companies and cases of misuse. For example, that the businesses that receive them commit to maintain employment (between 70% and 80% in 2021 and 2022), or the commitment that the business that receives the subsidies will leave the tax regime for modules in personal income tax. In addition, the purple party wants that when these conditions are not met, the aid has to be returned to the State, as well as if the business is inspected by Labor, or in other exceptional circumstances.
Eddie is an Australian news reporter with over 9 years in the industry and has published on Forbes and tech crunch.