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Contenuto principale

Liquidity support for households, businesses and local authorities

During an economic downturn such as the one Italy is currently facing, it is crucial to make every effort to prevent the effects on the real economy being transferred to the credit sector, as this would inevitably lead to a downward spiral of further negative impacts on households, businesses and local authorities (and therefore on local services), as well as on the financial system. Households, businesses and local authorities all risk seeing their income significantly reduced, affecting their ability to fulfil previous financial commitments and possibly also making it difficult for them to access credit. The Italian government intends to avert this possibility and has put forward a plan worth over € 750 billion through its ‘Liquidity’ Decree, to ensure that families and businesses have the liquidity they need. This plan has received the go-ahead from the European Union under the new rules on the Temporary Framework. This decree primarily refers to a moratorium on loans granted to SMEs and to exceptional guarantees provided by the Central Guarantee Fund for SMEs and the "Guarantee Italy" programme being run by SACE S.p.A., with the latter being provided with the necessary resources to handle extended operations through the subsequent measures introduced. Alongside the ‘Relaunch’ Decree, € 12 billion in liquidity has been allocated to Italy’s regional and local authorities, to be used to pay the debts they owe to suppliers. Lastly, the so-called 'August’ Decree ensured long-term continuity for the work carried out by the SME Fund and extended the duration of the moratorium on loans and mortgages.

The Italian government is therefore taking action on several fronts.

A) Relief measures for local authorities

Italy's ‘August’ Decree (Decree Law no. 104/2020) increased the fund for local authorities to perform their functions by € 1.67 billion for 2020 (€ 1,220 million for municipalities and € 450 million for provinces and metropolitan cities). The fund for local authorities therefore amounts to € 5.17 billion (of which € 4.22 billion for the municipalities); the fund for regional authorities and autonomous provinces to perform their functions has been increased by € 2.8 billion for 2020 (€ 1.6 billion for the autonomous provinces and € 1.2 billion for ordinary-statute regions). The fund for regional authorities therefore amounts to € 4.3 billion (€ 2.6 billion for the autonomous provinces and € 1.7 billion for ordinary-statute regions).

Additional resources have been allocated:

  • to make up for the lower revenues from the tourist tax (€ 300 million), Tosap/Cosap (€ 42 million) and the IMU property tax (€ 86 million);
  • to support local public transport (€ 400 million, with the relative fund now amounting to € 900 million), to support local authorities with a structural deficit (€ 180 million) and for regional disputes (€ 210 million);
  • to suspend the 2020 principal repayments for the MEF mortgages of the autonomous provinces (€ 88 million), with a measure that had already been introduced by the 'Cure Italy' decree for ordinary-statute regions and local authorities.

Investment measures have also been strengthened:

  • for municipalities, contributions for small works have been doubled for 2021 (€ 500 million in 2021); measures contributing to making buildings and the local area safe have also been strengthened (€ 900 million in 2021 and € 1.75 billion in 2022);
  • for local authorities, the resources allocated to final and detailed planning have been increased (€ 300 million per year for 2020 and 2021);
  • for provinces and metropolitan cities, resources are being provided to ensure the safety of schools (€ 1.12 billion for the 2021-2025 period) and to make bridges and viaducts safe (€ 600 million for the 2021-2023 period).

B) Payment of public administration debt

A € 12 billion fund has been established within the budget for the Italian Ministry of Economy and Finance to provide advances to regional authorities, autonomous provinces and local authorities facing a liquidity shortage, in order to help them pay certain and liquid debts due to suppliers. This fund is divided into two sections: one is intended to provide liquidity to pay certain and liquid debts that are owed by local and regional authorities and autonomous provinces (other than financial and health debts), and the other provides regional authorities and autonomous provinces with liquidity to pay debts owed to organisations within Italy's national health service. The ‘Cassa Depositi e Prestiti’ has been entrusted to run the two sections of this fund.

The ‘August’ Decree extended the deadline to grant liquidity advances for local authorities (from 20 September to 9 October 2020), thereby facilitating payment of the debt stock at 31 December 2019 vis-à-vis companies, benefiting Italy's entire economic system.

C) Moratorium on loans

Micro, small and medium-sized enterprises (SMEs), professionals and self-employed workers based in Italy can benefit from an extraordinary moratorium on current account credit lines, loans for advances on negotiable instruments, short-term loan maturities and loan instalments and rent payments due, for an overall loan volume of over € 300 billion. The aim is to help these categories of companies overcome the most critical phase of the fall in production linked to the Covid-19 emergency, preventing a significant drop in demand, albeit limited in time, from having permanent effects on a large number of companies. The 'August’ Decree extended the moratorium measures until 31 January 2021 (and until 31 March 2021 for loans held by companies in the tourism industry). A partial guarantee is available for these types of exposure from the Central Guarantee Fund for SMEs, free of charge. To access the moratorium, at the time the ‘Cure Italy’ decree was published (17 March 2020), companies had to be performing, i.e. without any debt positions that could be classed as being impaired by the banking system. Companies are required to self-certify that they have suffered temporary liquidity shortages due to the economic consequences of the Covid-19 epidemic, while banks and all other entities authorised to grant credit in Italy must accept moratorium requests, as long as they meet the requirements laid down by the ‘Cure Italy’ Decree. Companies may also send these notifications via certified e-mail. The extension provided for by the 'August’ Decree shall automatically apply to any positions already authorised to make use of the moratorium (unless expressly waived by 30 September) and will soon be operational with EU authorisation.

D) SACE guarantees

Large Enterprises – SACE Guarantee. Features: 6-year duration. Loans of up to 25% of turnover or double the personnel costs for 2019. Grace period of up to 36 months. For more information.

D1. Liquidity support for enterprises – Loan guarantees

A measure worth € 200 billion has been implemented, aimed at ensuring that companies based in Italy have enough liquidity: until the end of 2020, SACE S.p.A. will grant guarantees in favour of banks and other financial institutions for any kind of new loans disbursed to companies; following the conversion of the ‘Liquidity’ Decree, leasing, factoring and debt instruments may also be covered by the SACE guarantee. SACE will manage requests for risk hedging through the ‘Guarantee Italy’ programme, which shall also benefit from a counter-guarantee from the government: any kind of company, regardless of its size, business sector or legal form, can request this guarantee up until the end of 2020. At least € 30 billion out of the total of € 200 billion has been allocated to small and medium-sized enterprises (SMEs); however, in order to access the SACE guarantee, SMEs must have reached their limit with the Central Guarantee Fund, and, in the case of agricultural, forestry, fishing and aquaculture and horse-breeding enterprises, as well as ‘consorzi di bonifica’ and craft breweries, they must have already used the ISMEA guarantees. This is a first-demand, explicit and irrevocable guarantee and covers loans for an amount not exceeding 25% of the company's turnover in 2019 or double the personnel costs in 2019, whichever is higher. The same company may also ask for more than one loan, but the total amount requested must nonetheless respect these limits. The duration of the loans cannot exceed 6 years, with the possibility for companies to take advantage of a 36-month grace period.
Commissions must be limited to the recovery of costs and the cost of the guaranteed loan must be lower than what it would have been without the guarantee.
Smaller companies, with fewer than 5,000 employees and individual turnover of less than € 1.5 billion, and loans for less than € 375 million, can benefit from a simplified procedure, following just a few steps:

  • The company requests a loan with a State guarantee from a bank (or other authorised credit institution) of its choice
  • The lender checks the eligibility criteria, carries out a credit investigation and, if the loan is approved, it enters the guarantee request on the SACE online portal
  • SACE processes the request and, once it has checked that the loan has been duly approved, it assigns a Unique Identification Code and issues the guarantee, which is counter-guaranteed by the State
  • The lender disburses the requested loan amount to the applicant, with the SACE guarantee being counter-guaranteed by the State.

For companies that exceed the above thresholds (limited to larger companies), the approval of the Minister of Economy is required, through a specific ministerial decree.

All the details are available at the following link.

D2. Liquidity support for enterprises – Leasing guarantees

The law converting Italian Law Decree dated 8 April 2020 introduced the possibility for SACE S.p.A. to also issue guarantees in favour of leasing companies, for leasing transactions completed between 9 April and 31 December 2020.

This guarantee may be used for new financing transactions that meet the following requirements:

  • issued in compliance with the provisions of the Decree, as per SACE's dedicated Operating Manual and the General Terms and Conditions - ‘Guarantee Italy’
  • disbursed between 9 April and 31 December 2020
  • intended to support investments for the purchase of any type of essential immovable and movable assets
  • intended for liquidity purposes, up to a maximum of 20 per cent of the amount disbursed

All the details are available at the following link.

D3. Liquidity support for enterprises – Factoring guarantees

The law converting Italy’s ‘Liquidity’ Decree introduced the possibility for SACE S.p.A. to also issue guarantees in favour of banks and factoring companies for the assignment of credits with a solvency guarantee provided by the transferor, in addition to confirming transactions and contract advances.

This guarantee may be used for new financing transactions, with or without a credit line being granted, that meet the following requirements:

  • attributable to confirming transactions, contract advances and recourse factoring (spot and rotating)
  • issued in compliance with the provisions of the Decree itself, as per SACE's dedicated Operating Manual and the General Terms and Conditions
  • disbursed up until 31 December 2020
  • intended to create liquidity to help cover personnel costs, costs relating to rent or business unit leases, investments (excluding acquisitions of equity stakes in companies) or working capital, for production plants and entrepreneurial activities located in Italy. Refinancing transactions are not permitted
  • also intended for liquidity purposes, up to a maximum of 20 per cent of the amount disbursed.

All the details are available at the following link.

D4. Liquidity support for enterprises – Guarantees for debt securities

The law converting Italy’s 'Liquidity’ Decree authorised SACE S.p.A. to issue guarantees on debt instruments issued by companies that have their registered office in Italy and that have been affected by the Covid-19 epidemic; these guarantees are to be issued in favour of banks, national and international financial institutions and other subscribers of debt instruments or other debt securities in Italy.

SMEs and all other types of enterprises (regardless of their size, business sector and legal form) that issue bonds or other debt securities can benefit from this guarantee, as long as they meet the following requirements:

  • their registered office must be in Italy
  • they must have a rating of at least BB- or equivalent, assigned by an ECAI
  • they were not “in difficulty” as at 31 December 2019
  • only for SMEs, they must have already exhausted their limit with the Central Guarantee Fund, or ISMEA

All the details are available at the following link.

D5. Measures to support exports, internationalisation and business investments

The decree also strengthened government support for exports, improving the incisiveness and timeliness of state intervention. The measures have introduced a co-insurance system, whereby 90% of the commitments deriving from SACE's insurance business shall be taken on by the state, with the remaining 10% being taken on by said company, freeing up an additional € 200 billion in resources to be used to strengthen exports. The aim is to allow SACE to meet the growing demand to insure transactions deemed to be of strategic interest for the Italian economy, which the company would otherwise not have had the financial capacity to finance.

D6. Insurance for trade receivables

In order to support company exports and guarantee trade receivables insurance for companies affected by the economic impacts of the Covid-19 epidemic, the ‘Relaunch’ Decree provided a € 2 billion ceiling to allow SACE S.p.A. to grant a guarantee equal to 90% of the trade receivables insured by insurance companies that have signed up to the programme through a specific agreement. SACE's obligations are counter-guaranteed by the State.

E) Strengthening of the SME Guarantee Fund

Italian Decree Law no. 18/2020 and the subsequent Decree Law no. 23/2020 significantly extended the operations of the Central Guarantee Fund for SMEs, stating, inter alia, that the guarantee would be free of charge, with suspension of the obligation to pay the commissions necessary for access, that debt renegotiation transactions could also be covered by the guarantee and that the guarantee would be automatically extended in the case of moratorium or suspension of the loan due to the Coronavirus emergency. The maximum guaranteed amount has been increased to € 5 million and companies with up to 499 employees shall also be allowed to access the guarantee. The percentage of direct coverage has been increased to at least 90% for all loans of up to 6 years, with the possibility of reaching 100% if certain conditions are met. Beneficiaries may also be allowed to access the Fund if, as at the date of the guarantee request, they have exposures which the bank classifies as 'probable defaults' or 'past due or bordering on impaired', as long as this classification was made after 31 January 2020, or certain conditions are in place for the positions to once again be classed as “performing”. Companies that have exposures classified as 'non-performing loans' are excluded. The guarantee may also be granted for transactions already completed and disbursed no more than three months ago and, in any case, after 31 January 2020. By adding existing loans to new ones, the aim is for the Fund to issue guarantees for a total of over € 100 billion in financing for businesses. After already being refinanced for around € 4 billion by Italian Decree Law no. 34/2020, the ‘August’ Decree increased the Fund by € 3,300 million for 2023, € 2,800 million for 2024 and € 1,700 million for 2025.

There are three main loan thresholds:

  • Loans up to € 30,000: new loans, for an amount up to 25% of the company's revenues or double its personnel expenses (as reported in the most recent financial statements filed for tax return purposes, in other appropriate documentation or even in a self-certification), shall be 100% guaranteed by the Guarantee Fund for SMEs. The company submits a self-certification to its bank (or to another entity authorised to grant credit) regarding the damages suffered by its business due to the Covid-19 emergency. No type of appraisal is carried out by the Fund on the guarantee beneficiary, while the bank limits itself to assessing creditworthiness. These loans shall only require the principal to be repaid after 24 months and shall have a duration of up to a maximum of 6 years. The interest rate applied by the bank shall only take into account the coverage of appraisal costs and the expenses to manage the transaction. The guarantee will be granted automatically and will be free of charge; this means that the bank can disburse the loan after formally checking that the applicant meets the requirements, even without having to wait for the result of the Fund’s appraisal. The Italian Banking Association (‘ABI’) has published an example chart on its website regarding how to access funding below this threshold.
  • Loans of over € 30,000: the Fund guarantees 90% of loans over € 30,000 (without prejudice to the maximum limit of € 5 million per company) for companies with up to 499 employees, free of charge. The loan amount cannot be more than double the expenditure for salaries incurred by the beneficiary in 2019 or 25% of its total turnover in 2019 or its estimated liquidity needs for the next 18 months (12 months for companies with more than 250 employees). For the purposes of granting the guarantee, the Fund will not complete any assessment of the company.
  • If companies with revenues of up to € 3.2 million submit a self-certification to their bank regarding the damages suffered by their business due to the Covid-19 emergency, they can obtain a 100% guarantee, 90% of which is issued by the state and the remaining 10% by a third party (e.g. ‘Confidi’); for loans that do not meet the requirements in terms of duration (maximum 6 years) and amount, as required by the ‘Liquidity’ Decree, it is nonetheless possible to obtain an 80% guarantee, which may be combined with guarantees issued by Confidi.

F) Incentives for banks and industrial companies

Incentives have been introduced to encourage companies to transfer their receivables due from defaulting debtors by converting certain types of deferred tax assets into tax credits, within predefined limits. This measure shall free up new cash resources for businesses and allow banks to grant new credit, providing enterprises with new bank finance for up to € 10 billion.

G) ‘Solidarity Fund’ for mortgages to purchase main dwellings

The scope of the so-called “Gasparrini fund” has been extended. This fund allows holders of mortgages taken out to purchase their main dwelling, who are temporarily facing specific difficulties, to benefit from a suspension of their mortgage repayments for up to 18 months. Following the Covid-19 emergency, employees whose work has been suspended or who have had their working hours reduced for a period of at least thirty days, self-employed workers (including traders and artisans) and professionals who have suffered a drop in revenues of over 33% compared with their turnover in the last quarter of 2019, are all now allowed to access this fund.

This suspension can apply to both the repayment instalments due after the request is submitted and to those that were due and not paid before said date, as long as the payment delay does not exceed 90 consecutive days. This measure also applies to mortgages granted less than a year ago. The request form has been updated and simplified compared with the previous version: the new form can be filled in directly online and sent in accordance with the procedures indicated by each bank. Furthermore, with regard to all cases of access to the Fund:

  • it is no longer necessary to present the ‘equivalent economic situation indicator’ (‘ISEE’);
  • it is possible to benefit from the suspension, even if it has already been used in the past (as long repayments resumed at least three months ago);
  • the Fund is designed to cover 50% of the interest accruing during the suspension period.

The procedure to access this fund has also been sped up and simplified, with the bank automatically suspending the first payment due after the application is submitted to suspend the mortgage, following a simple check into the completeness and formal correctness of the request itself; a silent-approval mechanism has also been introduced for requests, if the Consap does not reply within 20 days from the application being sent. The maximum mortgage amount has been increased to € 400,000.

Other measures to be highlighted include:

  • The ‘volatility adjustment’ for insurance companies, which has come into immediate effect. Introduction of a state contribution for 50% of the interest.
  • A rule has been introduced that extends the deadlines and introduces the possibility to partially divide up the indemnity for savers drawing on the “savers’ indemnity fund” (“FIR”), the fund created to indemnify those savers still involved.
  • Suspension of repayments due in 2020 for SIMEST loans (for applications received by 30/06/2020)

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