THE Spanish government has approved a relief package that includes €7 billion in direct aid to small and medium-sized companies hit by the coronavirus crisis.

The total aid package, which was approved by the cabinet on Friday, totals €11 billion as it will also include €3 billion to be implemented through voluntary debt restructurings of state-backed loans granted by banks to those companies worst affected by the pandemic.

The remaining €1 billion euros will come in the form of capital injections.

Within the package for SME’s,  €2 billion has been earmarked for the Balearic Islands and Canary Islands, two regions hard hit by collapse of the tourism industry.

Regional authorities will have the responsibility for distributing the aid to companies in financial trouble, following a set of national criteria covering fixed costs such as rent or supplies.

Coronavirus Madrid restaurant
A man wearing face covering walks past a shuttered restaurant in the capital of Spain

In order to qualify for aid, ranging from between €3,000 to €300,000, companies need to demonstrate to Spain’s tax authority that their revenue has fallen since the start of the pandemic.

Banks will determine which companies are eligible for the debt restructuring included in the programme.

This is the latest in a series of measures designed to support businesses suffering as a result of the coronavirus pandemic which includes a national furlough scheme, known as ERTE in Spain, and state-guaranteed loans from the ICO national credit agency.

The cabinet also agreed to extend a moratorium on declaring bankruptcy to give stricken companies time for the measures to take effect.

READ ALSO: Rental prices and cost of homes fall in Spain as part of coronavirus real estate slump

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