- Access to finance
- Response to COVID-19
- Support of SMEs
Misure di sostegno finanziario per le imprese connesse all'emergenza epidemiologica Covid-19
COVID-19 emergency financial support instruments for businesses
In the context of the COVID-19 pandemic, the Italian government has adopted a raft of measures facilitating access to credit for businesses.
Decree law no. 18 of 17 March 2020 enhances the role of the Guarantee Fund for small and medium enterprises (Fondo di garanzia per le piccole e medie imprese) in supporting businesses affected by the COVID-19 pandemic (art. 49). The eligible companies are the ones classified as small and medium enterprises according to EU legislation, provided that they do not have, at the date of publication of the decree law, non-performing exposures. The same decree law (art. 56) foresees the possibility for micro, small and medium-sized enterprises that have debt exposures vis-à-vis banks and financial intermediaries to suspend loan instalments until 30 September 2020 (misure di sostegno fnanziario alle micro, piccole e medie imprese).
Credit guarantee measures (misure di accesso al credito per le imprese) were also introduced by law decree no. 23 of 8 April 2020, intended for all types of businesses based in Italy, with the exclusion of banks and other entities authorised to provide credit. The decree has also introduced temporary rules for the credit guarantee for SMEs (Fondo centrale di garanzia PMI) establishing higher thresholds in terms of amount and number of employees, compared to the regular measures.
Decree law no. 34 of 19 May 2020 (the so called Relaunch Decree) allocated further €55 billion to support businesses, artisans, traders, professionals, workers and families. The main measures are: grants to companies and sole proprietorships with revenues of up to €5 million; the cancellation of the Irap tax (regional production tax) for June and July for all companies with annual sales of up to €250 million; the strengthening of the Guarantee Fund for small and medium enterprises; and financial incentives to favour the strengthening of the financial assets of companies with revenues between €5 and €50 million.
The Italian government has introduced a number of measures to facilitate access to finance for businesses and support their operations during the COVID-19 crisis.
Guarantee Fund for small and medium enterprises (Fondo di Garanzia per le piccole e medie imprese)
Several decree laws aimed to strengthen the intervention capacity of the Guarantee Fund for small and medium enterprises by introducing temporary exceptions from its current operating rules. In particular, article 49 of the Decree Law 18/2020 of 17 March 2020 provides that for a period of 9 months from its entry into force:
- the guarantee is granted free of charge;
- the maximum guaranteed amount per individual company is increased to €5 million;
- the coverage of the guarantee is 80% (90% in case of reinsurance) on all operations of financing with a maximum guaranteed amount of up to €1.5 million.
The fund's allocation has increased by €1.5 billion. With this additional allocation (in the case of 80% coverage of all transactions) the fund could facilitate the granting of new loans for approximately €55 billion (amount would drop if the coverage percentages increased to 90%).
Article 13 of the Law Decree no. 23 of 8 April 2020 further intervened on the fund, introducing temporary rules for the credit guarantee for SMEs. The main provisions allow SMEs to obtain a credit guarantee until 31 December 2020 at more advantageous conditions than those ordinarily envisaged by the special credit guarantee fund for SMEs. In particular, the temporary conditions include:
- a free credit guarantee;
- the maximum amount of the credit guarantee for each individual enterprise is raised to €5 million;
- the credit guarantee is accessible for enterprises with up to 499 employees;
- the guarantee can cover up to 90% of the credit;
- the maximum amount of the credit guarantee cannot exceed 25% of the beneficiary's 2019 turnover; the double of the beneficiary's annual wage bill in 2019; the working capital and investment expenses for the following 18 months for SMEs and 12 months for enterprises with up to 499 employees.
Decree law no. 34 of 19 May 2020 (the so called Relaunch Decree) allocated further €4 billion to further finance the Guarantee Fund for SMEs, which are added to the resources already allocated in the two previously mentioned decrees to reach a total amount of approximately €7 billion.
Financial support measures for micro, small and medium-sized enterprises (Misure di sostegno fnanziario alle micro, piccole e medie imprese)
Article 56 of decree law No. 18/2020 of 17 March 2020 foresees the possibility for micro, small and medium-sized enterprises that have debt exposures vis-à-vis banks and financial intermediaries to suspend loan instalments until 30 September 2020. Furthermore, all subsidised loans can be suspended.
The operations subject to the support measure are admitted, without evaluation, to the guarantee subsidiary of a special section of the Guarantee Fund for SMEs with a budget of €1.73 billion which will cover 33% of non-payments of companies to lenders for the duration of the period of suspension.
According to the explanatory report, the measure should concern business financing (in the various technical forms) for approximately €219 billion.
Decree law no. 34 of 19 May 2020 (the so called Relaunch Decree) introduced a non-refundable contribution to companies and sole proprietorships with revenues not exceeding €5 million. These companies can access the contribution, provided that the turnover for April 2020 is less than 2/3 of the turnover for April 2019. The contribution is calculated by applying a percentage (20%, 15%, 10%) to the difference between the April 2019 and April 2020 turnover. The amount of the non-refundable grant is recognised, however, for an amount of not less than €1,000 for natural persons and €2,000 for subjects other than natural persons.
Measures to support businesses in obtaining credit (Misure di accesso al credito per le imprese)
Article 1 of the law decree no. 23 of 8 April 2020 introduced a credit guarantee for all types of businesses in order to cover personnel expenses, investments and working capital. The credit guarantee can be obtained from the state-owned holding for business credit guarantees, SACE.
SACE guarantees the credit provided by banks and other authorised entities up to €200 billion, of which at least €30 billion shall be in favour of SMEs, including self-employed workers and professionals registered for VAT.
The main criteria include: the guarantee must be established by 31 December 2020 for new credits up to six years. The cost of the guarantee increases with the size of the enterprise. The beneficiary must be solvent at 29 February 2020. The guarantee shall cover 90% of the credit for enterprises with fewer than 5,000 employees in Italy and a turnover up to €1.5 billion; 80% for enterprises with at least 5,000 employees in Italy or a turnover between €1.5 billion and €5 billion; 70% for enterprises with over €5 billion turnover. The total credit guarantee cannot exceed the higher amount between 25% of the 2019 turnover or the double of the personnel expenses in 2019. The beneficiary commits to manage occupational levels through collective agreements. The credit must cover personnel costs, investments or working capital concerning establishments and activities located in Italy.
Capital strengthening of medium-sized enterprises (Rafforzamento patrimoniale delle imprese di medie dimensioni)
Article 26 of Decree law no. 34 of 19 May 2020 introduced a tax incentive to encourage the strenthening of the financial assets of medium-sized companies. The tax incentive corresponds to 20% of investment up a maximum investment of €2 million.
Eligible are the companies which:
- have an amount of 2019 revenues between €10 million and €50 million;
- due to the COVID-19 emergency, in March and April 2020 suffered an overall reduction in revenues, compared to the same period of 2019, of not less than 33%;
- have deliberated a capital increase of not less than €250,000 after 20 May 2020 and by 31 December 2020.
- National funds
Legal framework, funding
Information on the effectiveness of the measures are still sparse.
The Ministry of Economic Development reports that between 17 March 2020 and 14 June 2020, 618,772 requests were presented to the Guarantee Fund for small and medium enterprises, for a total of requested financing amounting to more than €31 billion.
No information available.
The social partners assessed the measures introduced by the government very differently. The employer association Confindustria pointed at the excessive fragmentation of the measure and the fact that it is too focused on social assistence rather than productive investments. On the contrary, trade unions were skeptical of non-selective and unconditional measures for companies, which do not foresee a direction on the type of investments and their effects on workers.