Post-COVID-19 SME Financing Constraints and the Credit Guarantee Scheme Solution in Spain

Abstract

Countries around the world are working hard to fight against the economic crisis caused by the coronavirus pandemic, with a special emphasis on small- and medium-sized enterprises (SMEs) due to their vulnerability and importance in the business ecosystem. This paper analyzes the Spanish guarantee model and the measures taken by regional governments in conjunction with the main mutual guarantee societies (MGSs) to mitigate the economic problems associated with the COVID-19 pandemic. We show that public administrations may use guarantee schemes as instruments to improve SME access to financing while limiting the burden on the public budget.

Keywords: COVID-19, Small- and medium-sized enterprises, Credit risk, Mutual guarantee societies, Bank financing

JEL Classification: G21, G23, G28