Spain to extend loan scheme for struggling firms until June, sources say

MADRID, Nov 16 (Reuters) - The Spanish government is set to extend the availability of state-backed credit lines by six months until June, while also lengthening loan maturities and grace periods on loans under the scheme, three sources with knowledge of the matter said on Monday.

Guarantees on all lines, designed to help companies amid the coronavirus-induced economic crisis, would be extended to up to eight years from the originally planned five on most loans, one of the sources said, adding that the cabinet was likely to approve the changes on Tuesday.

Also, an extra year would be added to the grace periods, which allow borrowers to delay payment without being charged late fees, being found in default or having their loans cancelled.

Companies were given until December to apply for the existing state-guaranteed funding scheme of 140 billion euros ($166 billion). The grace period on a significant volume of loans ends in April, and many small businesses fear they will not be able to cope with their payments that soon.

The first line of 100 billion euros approved in March guaranteed credits for five years, while the second 40-billion batch approved in July backs the loans for eight years.

The Economy Ministry declined to comment.

$1 = 0.8447 euros Reporting by Jesus Aguado and Belen Carreno, writing by Andrei Khalip Editing by Ingrid Melander