Spain Unveils 40 Billion Euro Financing Scheme to Drive Green, Digital and Housing Transitions

Starting in the second quarter, the Official Credit Institute (ICO) is positioned to offer up to 40 billion euros in financing for businesses and self-employed workers. This allocation will be drawn from more than 84 billion euros in loans allotted to Spain by the Next Generation EU European funds. The move aims to support a productive push across sectors while aligning with broader climate and digital transition goals.

The Council of Ministers has approved the general framework for five facilities funded by the loans accompanying the Recovery Plan addendum, totaling 40 billion euros. Administration of these facilities will flow through the ICO and they are designed to back the dual ecological and digital transition as well as the expansion of affordable housing, with a particular focus on social housing initiatives.

The Economy Minister, Carlos Cuerpo, explained that after the various ministries sign the relevant agreements with the ICO and once entities in the financial system voluntarily join these programs, the new loans could become available to companies and the self-employed. He noted that the objective is to have funds circulating in the second quarter.

Loans managed by the ICO may be formalized through August 2026, while amortizations can continue to be reinvested through 2036. This structure broadens the reach of the funds and their capacity to support new investment projects, according to a statement from the Economy Ministry. The funds could cover up to 100% of eligible business projects, offering favorable financial conditions and extended repayment terms even amid current higher interest rates, according to the minister.

Five funding lines

The initial 40-billion-euro block is organized into five lines that target different areas of productive activity supported by European funds.

The ICO Green line allocates 22 billion euros to provide loans to households and both public and private entities for projects tied to the energy transition.

The ICO-Company and Entrepreneurs line allocates 8.5 billion euros to fuel growth and transformation of businesses, with a special emphasis on small and medium-sized enterprises. Within this line, the tourism sector has a dedicated sub-allocation of 1 billion euros.

The ICO-Housing line will deploy 4 billion euros to fund projects that increase the stock of rental housing in socially affordable terms and to upgrade existing social housing. The minister estimated that this amount could finance around 40,000 homes for social and affordable rental.

The fourth line, named the Spain Audiovisual Hub, is endowed with 1.712 billion euros to fund projects in the audiovisual sector. The aim is to spur private investment and improve access to financing for cinema, television, content creation, digital culture, and multimedia or interactive contents such as video games and visual effects.

Lastly, a fifth line through the so-called Next-Tech Fund, designed to support the business fabric with 4 billion euros and managed by Axis, the venture capital arm of the ICO Group. This line targets ongoing growth for Spanish startups in disruptive technologies, promoting innovation and digitalization.

Link to the new Tech Insurance and Transformation entity

The 40 billion euros are expected to reach companies, freelancers, and households through several instruments: bank loans via financial entities (20 billion), direct ICO loans, ICOs’ purchase of corporate bonds or debt, or direct equity investments in companies.

Economy ministry sources explained that the funds assigned to the Spain Audiovisual Hub line (1.712 billion) and the Next-Tech Fund (4 billion) will be used to finance the newly announced Spanish Society for Technological Transformation (SETT), as disclosed by the digital transformation minister at a recent industry event in Barcelona. The portion not allocated to businesses and freelancers from these two funds, totaling 5.712 billion initially, will be redirected to support the Sepi Tecnológica when the public entity is established. The aim is to have the project approved at the next Council of Ministers and operational within two to three months.

The minister of transformation hinted that SETT could become the instrument to oversee Spain’s return to equity stakes in major telecoms and tech firms, including potential investment stakes in large players, with a contemplated involvement of up to 10% in certain cases. It remains unclear whether the European fund instruments will back such public equity operations.