Short-term financial aid is being contemplated in the form of a moratorium under article 56 of Decree 18 (see 1. above).
3.2 New loans guaranteed by the Fund
In addition, the operations of the Fund have been widened so that it can provide - free of charge - a partial guarantee to new loans granted by credit institutions, for a duration of 72 months, for a maximum guaranteed amount per company (or group of companies) of EUR 5 million. For direct guarantee interventions, the coverage percentage can be up to 90 percent of the amount of each financing transaction.
Only the following entities are eligible to benefit from this measure:
- companies employing fewer than 499 employees
The financing transactions which are eligible for the guarantee of the Fund cannot exceed, either:
- double the annual personnel costs of the beneficiary in 2019;
- 25% of the 2019 turnover of the beneficiary;
- the amount needed for working capital and investment costs in the following 18 months in the case of SMEs, and 12 months for midcap companies with up to 499 employees.
For reinsurance coverage, i.e. when the loan is already guaranteed by a specialised entity like “confidi” (the Italian consortium providing guarantees to help companies in obtaining loans), the percentage can be up to 100 percent, subject to certain conditions.
Loans for refinancing transactions of the beneficiary’s debt are also eligible for the guarantee of the Fund provided that the existing loan amount is increased by at least 10%.
Eligible companies are entitled to obtain the loan guaranteed by the Fund even if their exposures are classified as UTP or past-due provided that the aforementioned classification does not date from earlier than 31 January 2020.
In addition, under certain conditions, loans guaranteed by the Fund can also be granted in favour of companies that, after 31 January 2020, (i) were admitted to a “concordato” procedure (composition with creditors) with continuity of business, (ii) entered into debt restructuring agreements or (iii) proposed a certified recovery plan.
Companies whose exposures are classified as “NPLs” are excluded from the guarantee of the Fund as a matter of principle.
Admission to the guarantee of the Fund is also envisaged, with 100 percent coverage both in direct guarantee and in reinsurance, for new loans not exceeding EUR 25,000 in favour of SMEs and professionals who self-declare that they have suffered damage due to the COVID-19 emergency.
The Fund guarantee is free of charge.
3.3 New loans guaranteed by SACE
A further measure consists in the State guarantee to be issued through SACE, which has been introduced by Decree 23 in favour of banks and national and international financial institutions and other entities authorised to exercise of credit in Italy for new loans of any type that will be granted to all types of companies until 31 December 2020 (including SMEs and professionals provided that they have utilised in full the guarantees made available by the Fund).
Admission to the new guaranteed loans is subject to certain conditions since the applicant company, as of 31 December 2019, should not have qualified as an “undertaking in difficulty” (UID), and its liabilities, as at 29 February 2020, should not have been classified as “deteriorated”.
In addition, the company must undertake not to approve the distribution of dividends or the repurchase of shares in 2020 (also for companies belonging to the same group), and to manage employment levels through union agreements (this actually means they cannot dismiss workers without reaching an agreement with unions which seems to be quite a burdensome requirement).
The guarantee can only cover loans granted by 31 December 2020 and with a duration of no more than 6 years for an amount not exceeding the greater of (i) 25 percent of the 2019 turnover and (ii) double the company’s personnel costs for 2019.
In addition, the guarantee will only cover loans intended to support personnel costs, investments or working capital used in production plants and business activities located in Italy.
The guarantee, which is on first demand, is granted in the maximum percentage of cases, between 70 and 90 percent depending on the size of the company, by way of a simplified process that does not require preliminary ministerial decrees and investigation activities by SACE. This applies in the case of companies with less than 5,000 employees in Italy and a turnover less than EUR 1.5 billion.
It is worth noting that the lenders are free to determine the interest rate and cost of the loan but that these must be lower than those which would have applied in the absence of the state guarantee (as stated by the lender’s legal representative).
The costs of the SACE guarantee are as follows:
- SMEs: 0.25% first year, 0.5% second year, 1% following years
- Any other entity: 0.50% first year, 1% second year, 2% following years