‘Liquidity Decree’, over €400 billion in guarantees
Rome, April 6, 2020 – 200 billion in loans, up to 90% guaranteed by the State, for all businesses; 200 billion in export guarantees; strengthening and simplification of the Central Guarantee Fund for SMEs; up to 100% guaranteed loans for holders of VAT numbers.
“With the decree approved today by the Council of Ministers, the Italian government is taking unprecedented measures to support the country's production system. A real ‘liquidity bazooka', with over 400 billion in guarantees taking the total amount of mobilised credit to over 750 billion. This intervention not only aims to defend and protect the country's industrial framework against the economic consequences of Coronavirus, but will also help companies, entrepreneurs and workers to recover. The government is close to businesses and takes care of them”, commented Italy’s Minister of Economy and Finance, Roberto Gualtieri.
State guarantees provided through SACE
The measures adopted involve state guarantees for 200 billion, granted through SACE, in favour of banks, enabling them to grant loans to companies of all sizes. In particular, the guarantees will cover between 70% and 90% of the loan amounts, depending on the size of the company, and shall be subject to a series of conditions including the beneficiary company not being able to distribute dividends for the next twelve months and the need to use the loan to support expenses for production activities located in Italy.
- Companies with fewer than 5,000 employees in Italy and a turnover of less than € 1.5 billion can obtain a guarantee equal to 90% of the loan amount requested and there is a simplified procedure in place for them to access this guarantee. The guarantee drops to 80% for companies with over 5,000 employees and a turnover of between € 1.5 and € 5 billion, and to 70% for companies with a turnover of over € 5 billion.
- The guarantee amount cannot exceed 25% of the turnover recorded in 2019 or double the company's personnel costs.
For small and medium-sized enterprises, including sole traders or holders of VAT numbers, 30 billion has been set aside, with access to the guarantee issued by SACE being subject to the condition that they have exhausted their ability to use the credit issued by the Central Guarantee Fund.
Central Guarantee Fund for SMEs
The Guarantee Fund for SMEs will be further strengthened.
In fact, new loans with a maximum duration of 6 years in favour of SMEs and small-scale professionals will be 100% guaranteed by the Fund, without the latter carrying out an evaluation procedure, for a maximum amount of € 25,000 and, in any case, not exceeding 25% of the beneficiary's revenues; the capital won't have to repaid until 18 months after the loan has been disbursed.
The Fund can now grant fee-free guarantees up to a maximum amount of € 5 million also to companies with fewer than 499 employees. The Fund will guarantee 90% of the loan amount. Finally, for companies with revenues of up to € 3.2 million, the 90% guarantee provided by the Fund can be combined with another guarantee from a third party, in order to obtain loans with a 100% guarantee, for financing of up to € 800,000 (and, in any case, not exceeding 25% of the beneficiary's revenues).
Support for exports
The decree also strengthens public support for exports, to improve 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.