Bank loans hard to come by in Mallorca

ICO loans, 80% guaranteed by the state, and ERTEs gave companies temporary liquidity in 2020, but that's probably only delayed a proliferation of bankruptcy proceedings and company closures.

The employers CAEB and PIMEM point out that the Bank of Spain’s warning to avoid a new bank insolvencies "harms companies that are dealing with lack of income, job destruction and an uncertain future.”

“The rules for granting credit to banks have not changed and remain the same, but we also warn that the capacity of Balearic companies to access financing has worsened after a year of dealing with the pandemic,” said CAEB President, Carmen Planas who added that “the economic and financial restrictions have halted activity at our companies and we’ve been plunged into a very difficult situation of having to bear the payment of taxes and being in debt without any possibility of an income.”

Planas stressed that "it is urgent to control the health crisis and speed up the pace of vaccination so that we can reactivate demand and economic activity.”

“Many companies will not be able to pay their loans due to lack of income and a simple moratorium on ICO loans is not enough,” said PIMEM President Jordi Mora. “Banks will have to restructure the debts to ensure liquidity to the productive system in order to avoid the total paralysis of the economy in Mallorca and other islands.”

“The Balearic Islands are the region with the highest financial risk as it is the most affected by the pandemic, which is why banks have changed their strategy to prevent their balance sheets from deteriorating with loans that they don't know if they will ever recover,” said the Impulse Foundation. “It is a complex situation that affects the productive fabric and the economy of the Islands.”