Self-employed, coronavirus crisis, and the Spanish economy

The coronavirus has not only caused a serious health crisis, but it is also significantly affecting the Spanish economy. Since the state of alarm was decreed on March 13, thousands of self-employed individuals and SMEs have been forced to temporarily halt their activity. This has affected all sectors, but especially tourism.

The coronavirus crisis and holiday rentals

In Spain, the tourism sector has a significant weight in the GDP. Good proof of this is that in recent years, the number of hotel beds and tourist apartments has multiplied. The latter have become a good business option for self-employed individuals and small businesses that want to participate in the tourism sector but do not have sufficient resources or knowledge to acquire and manage a hotel. The truth is that tourist apartments have worked very well, especially in large cities like Madrid or Barcelona, to the point where stricter legislation has been needed to regulate proper coexistence between neighbors and tourists. It seemed that nothing could stop such a booming business, but Covid-19 has completely paralyzed activity in the tourism sector.

How to face the effects of coronavirus on the economy?

For some days now, measures and public aid have been adopted so that the damage to the Spanish economy caused by the confinement derived from the state of alarm is as minimal as possible. But it is clear that some sectors are being more affected than others. Self-employed individuals and small businesses that operate by renting tourist apartments know that the situation will take some time to return to normal. Faced with this situation, those affected are already looking for alternatives and changing their business model. An increasing number of tourist apartments are now being offered as long-term housing, thus returning to the traditional rental market. For experts, this shows that professionals in the sector foresee that the tourism crisis will be long and will extend beyond the state of alarm, which is why they are looking for other ways to maintain the profitability of their investment. However, the forecast is that this change in model will only be temporary, and that when things improve again, the number of tourist apartments will increase, since for their owners they are more profitable than traditional rental housing.

Unemployment benefits for the self-employed

For the self-employed, the Government has provided an extraordinary benefit for cessation of activity, the inaccurately named unemployment benefit for the self-employed. This aid aims to guarantee an income (at least 661 euros) to all those professionals who have had to stop their activity or have lost more than 75% of their turnover, so that they are not forced to close their business. In addition, they will not have to pay the monthly contribution. The ministry has published a small guide on the measures adopted on its website.

Aid for the self-employed in the tourism sector due to the Coronavirus

The Government has decreed aid through ICO (Official Credit Institute) loans, both for companies and for the self-employed, whose activity falls within the tourism sector. This way, any self-employed individual whose activity is related to tourism, hospitality, or transport can apply for this aid. According to David Basilio, founder and operations director at Linkers, a consultancy specializing in hospitality and tourism, the Government's commitment with this line is to assume 50% of the risk of loan default, delegating the other 50% to the entities. Thus, the ICO acts as a guarantor for 50% of the debt.

Will there be a moratorium on rent payments?

On the other hand, it should not be forgotten that the possibility of establishing a moratorium on rent payments for those people who have seen their income reduced due to the crisis associated with the coronavirus is already being considered. This decision could affect those who have changed their tourist apartments for rental housing. Despite the many changes that are taking place these days, it should not be forgotten that the Spanish economy is very much based on tourism and that the forecast is that things will start to improve in a few months. Furthermore, once everything passes, people will be eager to travel and leave home, so it is still a good idea to consider the option of fully entering the world of tourist rentals. In fact, now may be a good opportunity to start planning your new holiday rental business or see how you can improve it.

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