Spain’s banks to offer government-backed interest-free loans to people struggling to pay rent due to Covid-19 lockdown

Spain’s government has announced that several of the country’s banks will offer interest-free loans to people who are struggling to the pay rent as a result of Covid-19 and the lockdown.

INDIVIDUALS can apply for fee-free and interest-free loans to cover the rent of their main residence due from April 1, 2020. “Applicants will not be charged any interest or fees to set up the loan as they will be fully covered by the State,” confirmed the Government. The loans are expected to benefit around 450,000 struggling families, protecting not only the landlord, but also tenants who are struggling to keep up with rental payments. They will  “preserve the stability of the rental market and guarantee people the right to housing,” it added.

The loans will backed by the Government’s Ministry of Transport, Mobility and Urban Agenda (MITMA), through the country’s official Credit Institute (ICO). So far 11 banks have agreed to offer the loans in association with the ICO. They include Bankia, Santander, Sabadell, Cajamar, Liberbank, Unicaja, Abanca, Bankoa, Laboral Kutxa, Caja Pollença and Caja Ontenient. MITMA expects more banks to sign up to offer the loan over the coming days.

According to the Government, the interest-free loans are for people who have seen their income significantly reduced, or who have been laid off from work, as a result of Covid-19. Those with minors or dependents in their care as a result of the crisis, which is affecting their ability to return to work, can also apply. The loans will cover a maximum of six months of rent, up to 900 euros per month from April 1, 2020. The loan can be paid back over a period of six years, with an additional four years, if required, the Government added.