The countdown has begun until the €39,862 million in funding that the Institute of Official Credit (ICO) will direct from EU Next Generation European Credits becomes available to businesses and the self-employed (and to a lesser extent individuals). The Council of Ministers intends to approve before the end of the month the agreements concluded between the General Bank and the Ministries of Economy and Housing to strengthen the three main lines of the program ($34.150 million), as government sources confirmed to Al-Jarida newspaper. There is less certainty as to whether it will also be possible to do this with the Ministry of Digital Transformation for the remaining two lines (5,712 million).
The most advanced lines are ICO-Green ($22,000 million in loans to households, private and public companies for green investments); Corporate and Entrepreneurship ICO ($8,150 million to finance business investments under favorable conditions) and a $4,000 million fund to increase the stock of affordable social rental housing by approximately 40,000 homes through public or private developers. The other two funds are the ICO Next-Tech Fund ($4,000 million to facilitate the growth of technology startups) and the Spanish Audiovisual Center ($1,712 million for the audiovisual and video game sector).
The agreements with the ministries, through which the specific conditions for each of the five lines will be determined, are the initial step necessary for the ICO to sign bilateral agreements with banks interested in directing the planned US$18,700 to US$20,000 million to financial institutions. Which will be involved in all lines except Next-Tech. Another 8.75 billion will be channeled through private venture capital entities, while the rest will be channeled through ICOs directly through direct loans to companies and obtaining corporate debt for specific projects.
The ICO will provide resources to banks, which will carry out operations with their clients and who will alone bear the risk of not paying them. The credit rate for the bank will be determined on the basis of the cost of EU financing (about 0.2 or 0.3 points below the Treasury rate, depending on whether the term is greater or less than five years), while the cost to the client depends on factors such as the repayment term and the its own risks.
The credits will arrive in the economy with a slight delay: the government’s initial idea was that they would be available at the beginning of the year and later considered a date after Easter. The banks were sympathetic, but also concerned. “On that aspect, we have more doubt. The government’s intention was for this to start working in January, and what we’ve seen is that the deadlines have been extended longer than we would all like, even though the end result is over.” “The application deadline (for loans from companies) of August 31, 2026 has not changed, what this means is that our deadline for channeling funds has been reduced,” warned Maria Abascal, general manager of the employer AEB, a few weeks later. Previously at the CEO event.
However, the second man in the employers’ association led by Santander and BBVA considered the delay in responding to the “complex negotiations with Brussels” to be “understandable.” He also noted that credits could actually start to become available in the banking market “more or less towards the summer,” although he noted that “it could be at the beginning of the summer or maybe we could move toward the end of the summer.” Q3, we’ll see.” In fact, some banking sources do not rule out that financing will not be fully operational and available to companies until early fall.
Productive investment
Beyond the deadlines, Abascal pointed to several challenges that the bank believes need to be overcome for European credit to succeed. He considered it necessary for the loans to be allocated to productive investment projects and not to spending, as until now “a high percentage of the funds have been linked to projects with a general purpose.” He also warned that demand for trade credit has fallen sharply in recent quarters due to rising interest rates, so “a big challenge will be to generate or find sufficient demand for solvent credit.” In this regard, he stressed that European loans will compete with other methods of business financing, and therefore the “financial aid” they include “must be sufficient to compensate for all the administrative burdens associated with them.”
The ICO’s president, José Carlos García de Quevedo, noted that the nearly $40,000 million equates to between 6% and 8% of the new financing the bank has granted to companies in the past two years.
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