The current coronavirus pandemic has had a devastating effect on the global economy. Some industries more harshly disrupted than others as a result of lockdown. As Italy entered ‘state of emergency’ resulting, in the closure of businesses, the country saw people losing jobs in masses and companies seizing to exist. The Italian government, together with the European Commission, put financial measures in place to assist member states from entering an economic slump. These are some of the business grants and schemes as a result of COVID-19 in Italy.
Italy’s Guarantee Scheme for Businesses
Italy, together with support from the European Commission, announced a “Guarantee Fund for SMEs” in hopes to assist struggling businesses as a result of the global pandemic. The commission makes provision for member states under the Temporary Framework scheme. The program supports companies affected by the coronavirus outbreak in the form of state-guaranteed loans, direct grants and liquidity.
Companies with less than 500 employees and self-employed persons will be eligible for applying for the scheme. The aim of the program hopes to assist companies with working capital and investments, which will help with job retention and continuation of operations. Furthermore, the Temporary Framework sets specific measures which include:
Businesses which meet with the Temporary Framework requirements qualify for 100% state-guaranteed loans of up to €800,000 per company. While the agriculture and fishery industry are applicable for a lesser amount of €120 000 and €100 000 respectively, all other sectors will assume 10% of the risk. In comparison, the government plans to guarantee 90% risk on business loans. The approved amount will be granted upon assessment of each company’s needs. The guarantees are limited to six years and will only be provided until December 2020. Guarantee premiums are in line with the Temporary Framework.
Financial Aid for Italian Businesses
Earlier in April, Italian Prime Minister Giuseppe Conte announced a further $434 billion package in addition to the previously allocated amount of €340 billion in government-backed loans. The package hopes to assist financially distressed companies of all sizes during the current coronavirus crisis. Conte said the funds would be administered as loans and split between the domestic economy and boosting the export market.
Export companies applying for the loan scheme will need to indicate that their turnover has imploded as a result of the pandemic. Also, the government announced a plan to protect financially vulnerable companies as a result of the economic crisis.
A small town in Italy took matters into their own hands in hopes to assist struggling businesses during this crisis. Castellino del Biferno, a village with less than 550 residents, started printing its own money in hopes to keep businesses going.
Tax relief measures have been put in place to assist struggling businesses in Italy. This includes deferral on payments without accrued interests and postponements on filing. Like with many countries across the board, governments are implementing unprecedented measures to cushion the economic blow caused by coronavirus lockdowns. To learn more about how some European countries are helping save their economies, visit: Government Finance Schemes in Germany.