Caja Madrid Offers 2,250m € to 18,000 Small and Medium-Sized Businesses for their Day-to Day Running.
Written by Allan on November 18th, 2008In the midst of a liquidity crisis which is threatening to engulf small and medium-sized businesses, Caja Madrid is granting 2,250m € under preferential conditions to help pay wage bills, social security, rent and supplies. Additionally, it will offer credit for investments with a two year grace period.
Small business owners who are finding themselves choked by a lack of liquidity and are having difficulties obtaining credit to finance their daily activities will be able tap into the new credit facilities which are soon to be offered by Caja Madrid. The bank has decided not to with hold credit to small and medium-sized businesses and has assigned part of the 13,000m€ it has in liquid funds to help them.
According to sources close to the operation, the scheme will initially be rolled out in Madrid, but could be extended to other regions. It will provide 2,250m € for investment projects, working capital, internationalization and job creation. 2,000m € of the total amount which Caja Madrid is pouring into the programme will go to financing investment projects as well as the day-to-day running of businesses. According to yesterday’s edition of Cinco Días, the latter is a new scheme which the Official Credit Institute (pending approval from the Ministry for the Economy) intends to copy.
The bank will set up a specific credit account called the Basic Business Credit Account which will grant an amount equivalent to quarterly expenditure on wage bills, social security, tax, supplies and rents with an upper limit of 1m€ per company. The business will be charged the Euribor 6 month interest rate plus 1.0% with an account opening commission fee of 0.25%.
The businesses will additionally be able to take advantage of loans for investment projects, with preferential conditions, of up to 2m €. The most important feature of the lending facility is that the business will have a 2 year grace period during which it will only have to pay the interest on the loan, thus allowing the company to ride out the worst of the crisis. If the project is related to Research and Development and Innovation, there will be no account opening commission fee.
Caja Madrid will also provide 200m € more for international expansion projects and a further 50m€ for employing members of socially disadvantaged groups (the long-term unemployed, the handicapped and working women with difficult family circumstances.) Caja Madrid hopes that this scheme will increase their share of the market in the small and medium-sized businesses sector which stands at 15% on a national level with 18,000 customers and 43% in Madrid after opening to them 3 years ago.