Business closures in Palma. | T. Ayuga

Around 5,000 companies in the Balearic companies who owe money to the Social Security have asked to defer payment of their debts.

Under State Subsidy Law, businesses that are not up to date with their payments cannot benefit from any type of aid or subsidy, which means thousands of employers who can’t pay what they owe to the Treasury or Social Security because of the coronavirus crisis don’t get any money.

By deferring their debts and agreeing to a payment plan for money owed, 4,958 companies will qualify for aid.

The Government has approved 87.07% of the debt deferrals and denied 641, but Llorenç Pou, General Director of Econòmic Model says some of the companies are up to date with payments and will receive aid.

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Social Security payment deferral requests have tripled in the last year from 1,815 in 2019 to 4,958 during the pandemic.

The volume of Social Security debt has also rocketed from 20.18 million euros in 2019 to 48.78 million euros, an unprecedented increase of 141%.

Pou believes that’s because small companies are now filing deferral requests, which were previously more typical of large corporations and he points out that the same thing has happened with ERTEs, or temporary suspension of employment, which very few small companies have benefited from.

12.93% of all debt referral requests were denied, compared to 11,46% before the pandemic began, which Pou says shows that companies have made an effort to keep their businesses alive.

855 million euros of Government aid is available for companies, but it must be awarded before the end of this year, because any money that’s left over will be returned to the Central Government.