if they take on new debt to cover their liquidity needs their debt ratio will increase. in consequence, the composition of firms ’ liabilities will ultimately weaken. the data available for 2020 already show a deterioration in the financial position of the business sector. the central balance sheet data office quarterly survey ( cbq ), which has data on some 900 – mainly large – companies, shows that during the first half of the year, the average return on assets of the sample of respondent companies fell to 2 %, 2 pp below the figure recorded in the first half of 2019. in addition, the percentage of firms that recorded losses rose by more than 11 pp, to 37 %. 5 the survey also shows that, on average, the debtto - assets ratio rose by 1. 5 pp, while the debt - to - earnings ratio rose more substantially, owing to the sharp decrease in revenues. the microsimulation exercises conducted by the banco de espana confirm these trends for the business sector as a whole in 2020. it is thus estimated that around half of all firms will post losses this year. however, we see considerable heterogeneity across these firms. smes and, above all, those belonging to the sectors most exposed to the shock, such as hospitality, leisure and motor vehicles, will be significantly more affected. the percentage of firms with a high debt - to - assets ratio6 is expected to rise by around 7 pp for the business sector as a whole, with this increase much sharper in the group of firms pursuing their activity in the sectors most impacted by the pandemic. in terms of the debtto - earnings ratio, it is estimated that the proportion of firms in a situation of greater vulnerability will see the highest increase, owing to the strong decline in revenues. that said, this indicator tends to overestimate the deterioration in firms ’ solvency in the current see m. menendez and m. mulino ( 2020 ) : results of non - financial corporations to 2020 q2, analytical article, economic bulletin, banco de espana. debt is considered to be high when the net debt - to - net assets ratio is greater than or equal to 0. 75. situation because, in many cases, the level of profits in 2020 is not representative of expected future profits. the increase in debt and the decline in revenues affect some firms ’ debt repayment capacity. but the extension of maturities and the lower interest rates on new loans granted during the crisis compared with

which was initially 12 months, has been extended to 24 months. similarly, the deadline for granting of guarantees, which was originally 31 december 2020, has been extended to 30 june 2021. in addition, financial institutions should maintain the limits on working capital facilities up to that same date for all customers that have a guaranteed loan and comply with the eligibility requirements. this royal decree has also extended the insolvency moratorium, which was set to expire on 31 december this year, to 14 march 2021, with the aim of preventing firms that continue to experience temporary, pandemic - related financial difficulties from having to file for insolvency. this measure aims to reduce the risk of viable firms being eventually wound up, with the impact this would have both on the productive system and in terms of job losses. the available evidence suggests that the economic policy measures taken have helped to ease firms ’ financing conditions, which contrasts with what was seen in the international financial crisis that began in 2008. it is a consequence not only of the swift and forceful economic policy response, but also of the better financial situation of the banking system and, in particular, of the larger capital buffers built up by the banks in recent years that have enabled them to absorb losses in their credit portfolios. the different nature of the current crisis has probably also been a determinant in this respect. in any event, since 2020 q2 firms have resorted to debt on highly favourable terms to cover part of the increase in their liquidity needs. specifically, between february and september, the outstanding amount of corporate sector debt rose by almost 5 %. the increase was concentrated in particular in the months of march, april and may. the ico guarantee programme has played an important part in adding momentum to bank lending. as at 15 november, total funding granted under this programme amounted to €108, 032 million ( including the portion intended for the self - employed ). essentially, these funds have been provided to firms that faced greater funding difficulties, such as smaller firms and those most affected by the pandemic. in addition, the loans have been granted on highly favourable conditions, in terms of interest rates and maturities, thus improving the existing corporate debt maturity structure. firms ’ solvency risks i will now move on to firms ’ solvency risks. lower turnover has a negative impact on firms ’ revenues and reduces their ability to repay their debts. in addition, firms that record losses will see their capital decrease, while