The Official State Gazette (BOE) has published the expansion of the coverage of direct aid for SMEs and the self-employed, which the Council of Ministers approved this Tuesday. The aid, of a total of 7,000 million euros to be distributed among the different Autonomous Communities, were running out of execution in many regions. The Executive has approved two modifications with the intention of increasing the beneficiaries: they may be used for debts and pending payments until September 30, instead of until May 31, and it is also authorized that they cover “accounting losses.”
This is the distribution of direct government aid for freelancers and companies in each community
The changes have been reflected in the royal decree-law of urgent measures to mitigate the rise in the price of electricity. In the first place, it extends by four months the period of coverage of the aid, which is managed by the Autonomous Communities.
Specifically, the decree now establishes: “The direct aid received by the self-employed and companies considered eligible will be final and must be applied to satisfy the debt and make payments to suppliers and other creditors, financial and non-financial, as well as to offset costs fixed fees incurred as long as they have been generated between March 1, 2020 and September 30, 2021 and come from contracts prior to March 13, 2021 “.
Second, the Government has clarified the expenses that can be covered with these funds, while at the same time setting priorities when it comes to covering those expenses.
The decree previously established that in the first place, the money received should cover “payments to suppliers, in order of seniority and, if applicable, the nominal amount of the bank debt will be reduced, prioritizing the reduction in the nominal amount of the debt with public guarantee” .
Now, the legal text states: “In the first place, payments to suppliers and other non-financial creditors will be satisfied, in order of seniority; if appropriate, secondly, the debt with financial creditors will be reduced, prioritizing the reduction of debt with public guarantee. Lastly, the remainder of the aid may be used to offset the fixed costs incurred, which include the accounting losses inherent to the business activity that have not already been covered with these or other aid “.
Accounting losses represent a decrease in a part of the assets and rights of the company and also apply to negative results in the balances of slopes. That is, the red numbers when income is less than expenses.
“Regardless of the financial structure, the losses reflect the reduction in the net worth of the companies, so that the application of the aid to their compensation, once the obligations and debts generated have been covered, is consistent with the objective of reinforcing solvency business in order to promote economic recovery, investment and job creation “, states the decree.
The self-employed consider it insufficient
The self-employed organizations ATA and UPTA spoke on Tuesday about the expansion of the aid, which they consider insufficient to reach many businesses and professionals who have been harmed due to the pandemic.
The president of ATA, Lorenzo Amor, stressed for example that the aid will not reach professionals who have seen their income drop drastically without incurring expenses. “A tourist guide, a photographer, a physiotherapist, a teacher, a journalist, a translator,” he put as an example. The self-employed organization of the CEOE asks that the aid can be granted simply by demonstrating a sharp drop in income.
It should be remembered that these direct aids are intended to guarantee “business solvency” and that the Government has approved for the crisis due to the pandemic another aid to guarantee income to the self-employed affected in their businesses, the so-called ‘strike’ of the self-employed or benefit for cessation of activity.
For his part, the president of UPTA, Eduardo Abad, defended this Tuesday in an interview the need to “give a complete return” to the decree on aid. In the self-employed organization, they consider that these funds should be able to be used to cover debts with Social Security and the Treasury, and they also share that they can be used for businesses that simply demonstrate a reduction in their strong turnover (“of 50%”), without the need that they have had to borrow or leave outstanding payments.
At UATAE they are more positive and celebrate the broadening of the criteria. María José Landaburu, general secretary of the organization, considers it especially important that “accounting losses can be attributed”, since “the spirit of the aid was that, to cushion the blow on billing.”
Now the Communities have to act
The Government has announced the changes in the direct aid decree so that the Autonomous Communities that have unfunded funds can reopen the calls. Now the ball is back in your court. The self-employed organization UATAE has called on the Communities to “pick up the glove” with a “clear commitment” to reopen calls to “make this opportunity to reach those who need it a reality.”
María José Landaburu has defended that “the initial lack of reflexes and the subsequent bureaucracy cannot mean that they do not arrive and remain in limbo” at a time when the economic recovery still needs “support and encouragement” to finish consolidating.
The Ministry of Economy has not provided data in this regard, but the self-employed organizations warned in July that 60% of the 7,000 million budget were not executed, according to their estimates. UPTA clarifies, however, that there are enormous differences between territories. Andalusia stated at the beginning of September that it was managing aid for “more than 200 million”, far from its allocated budget of 1,100 million euros. On the other hand, Castilla-La Mancha, ensures that they have received requests even for a value above the funds received.