In order to ensure business continuity, the Law Decree no. 23 of 8 April 2020 (also known as “Liquidity Decree”) introduced some measures aimed at foster lending, through the provision of State guarantees on financing to Italian businesses.
2. Sace S.p.A. guarantee (Article 1)
Article 1 of the “Liquidity Decree” provides that, at certain conditions, loans could benefit a guarantee from the company Sace s.p.a. (Italian export credit agency, State-owned).
The Sace guarantee is reserved to loans granted after the entry into force of the “Liquidity Decree”, and until 31 December 2020; with a maximum six-years duration. Loans must be addressed to staff costs, investments (acquisitions of shareholdings excluded) or working capital for business activities localised in Italy.
Furthermore, 90% of the commitments arising from Sace's guarantee will be assumed by Italian State with an irrevocable guarantee on first demand.
The beneficiaries of the guarantee
The guarantee is applicable to all companies and enterprises with registered offices in Italy.
Companies with debt exposures classified as “non-performing” on the date of 29 February 2020 are excluded from the application of the Sace guarantee.
In addition, in order to access the guarantee, companies should not be classified as “distressed-business”, according to the Regulation EU no. 651/2014, 702/2014 and 1388/2014.
The amount of the guarantee
The guarantee covers:
- 90% of the financing amount for companies with less than 5.000 employees in Italy and with an up to 1.5-billion-euro total turnover;
- 80% of the financing amount for companies with more than 5.000 employees in Italy and with a turnover between 1.5-billion and 5 billion-euro;
- 70% of the financing amount for companies with a total turnover higher than 5 billion-euro.
The loan secured by this guarantee, granted to one beneficiary, cannot exceed the highest amount between the 25% of the turnover of 2019, and twice the wage bill related to 2019.
Additional limits for beneficiaries
Beneficiaries undertake to:
- avoid distributing dividends to shareholders during the one year following the payment of the loan;
- manage the employment levels, through trade-union agreements;
- use the obtained loan in order to support staff costs and/or to support business activities in Italy.
Moreover, with the guaranteed loan it is forbidden to pay off previous debt exposures (with the only exception of those debt exposure reductions agreed before the entry into force of the “Liquidity Decree”).
3. The strengthening of the so-called SME Guarantee Fund (Article 13)
Article 13 of the “Liquidity Decree” further extend the coverage of the SME Guarantee Fund, until 31 December 2020.
Pursuant to Article 13, can access the SME Guarantee Fund also:
- companies with less than 499 employees;
- companies with debt exposures already classified as “unlikely to pay-UTP” or “Past Due”, only if this classification is later than 31 January 2020.
Companies with debt exposures classified as “Non performing-NPL” still remain expressly excluded from intervention of SME Guarantee Fund.
Article 13 of the “Liquidity Decree” introduces also important measures relating to debt restructuring.
Indeed companies with debt exposures classified as “non performing” can access to debt restructuring measures (as, for example, re-financing unsecured debts) if the new loan is at least 10% higher than the rescheduled debt.
Furthermore, can access the Guarantee Fund, at certain conditions, also companies already admitted to composition with creditors’ procedure based on business continuity, and companies that entered a debt restructuring arrangements under Article 182-bis, or turnaround plans under Article 67 of the Italian Bankruptcy Law.
Simplifying of credit investigation
Further provisions area aimed at simplifying the investigation phase related to the granting of the Guarantee.
This article has been authored by Matteo Pasculli and Alice Dognini.