22. Italy

Small and medium-sized enterprises (SMEs) account for the vast majority of Italian firms, providing nearly 80% of the industrial and service labour force and generating about two-thirds of turnover and value added.

The impact of the pandemic led to disruptions in business activity and liquidity shortages. Credit markets were buttressed by the ECB’s expansionary monetary policy measures, flanked by the financial support initiatives adopted by the Government. Lending increased at a sustained pace for large enterprises and, after many years of contraction, also for small companies.

Lending standards remained broadly relaxed in 2020. Business borrowing rates stood at low levels, and collateral requirements declined, partly as a result of the widespread recourse to public guarantee schemes.

Credit quality improved further, benefitting from the financial support measures adopted by the Government after the outbreak of the pandemic. The ratio of SME new non-performing loans to outstanding loans reached the lowest level in fifteen years. The stock of non-performing exposures dropped significantly, as a result of their further disposal during the pandemic.

Equity financing for SMEs, provided in the form of early stage and expansion capital, increased moderately, entirely driven by a sustained growth in the early stage segment; by contrast, resources devoted to large firms decreased markedly, after remaining virtually unchanged in the previous year.

Business-to-business payment delays, on a declining path after the sharp upswing recorded during the global financial crisis, started rising again at the outbreak of the health emergency; payment patterns returned close to pre-pandemic levels at the end of 2020.

Bankruptcies dropped for the sixth year in a row, down by more than 30% with respect to 2019: the sharp decline can be partly explained by the moratorium on insolvencies and the slowdown in court activity due to the pandemic containment measures.

The Government unleashed a broad policy effort to counter the unprecedented challenges faced by SMEs during the pandemic through a wide range of financial support measures. These initiatives, originally focused on liquidity relief, were progressively matched by broader recovery packages.

Credit guarantee schemes have traditionally played a crucial role in easing SME access to finance. During the pandemic the Central Guarantee Fund was further strengthened, by widening the range of potential beneficiaries, raising the coverage ratios of loans, increasing capital endowments and simplifying procedures. The State guarantee system was boosted by giving SACE, the Italian export credit agency whose tasks were redefined, the role of providing public guarantees to large firms; the initiative was also extended to SMEs that had exhausted their ability to access the Central Guarantee Fund.

Other provisions included the roll-out of a debt moratorium to help firms cope with temporary liquidity shortages due to the abrupt fall in production. This measure allowed SMEs to obtain the freezing of uncommitted credit facilities, an extension on maturing loans, and the suspension of instalment payments.

The emergency measures were later flanked by more selective initiatives, aimed at avoiding imbalances in the financial structure of firms. Measures aimed at encouraging a greater inflow of equity into the productive system envisaged a wide range of instruments to strengthen capitalisation and promote the recovery of economic activity.

Small and medium-sized enterprises account for 99.9% of Italian firms; the share of micro-firms hovers around 95% (See Table 23.2). In 2019, SMEs employed around 80% of the industrial and service labour force and generated about two-thirds of turnover and value added (see Figure 23.2).

After posting a virtually nil growth in 2019, the Italian economy was hard-hit by the COVID-19 pandemic during the subsequent year, recording a sharp decline in GDP. The uncertainty surrounding the cyclical phase translated into a sharp resizing of firms’ investment plans.

Disruptions in business activity and declining cash flows led to liquidity shortages, largely met by the increased credit availability, spurred by the ECB’s expansionary monetary policy stance and by the swift adoption of public support measures. Amidst supportive lending conditions, bank debt increased at a sustained pace since March 2020, first for medium-sized and large firms and, since June, after many years of contraction, even for small companies. The increase in credit was more marked for large enterprises. The share of SME loans in total business loans decreased slightly to 17.1 per cent, the lowest level since 2007. Loan maturities further shifted from short-term to long-term lending, likely reflecting the opportunity to access public guarantees and the need to cope with the uncertainty surrounding the economic outlook.

Credit supply policies remained broadly relaxed in 2020, continuing the trend shown in the second part of the previous year. According to the euro-area bank lending survey, which gathers supply-side information about the changes in Italian banks’ credit standards for approving loans or credit lines, terms and conditions in lending supply to firms remained loose throughout the year also thanks to the favourable effects of the public guarantee schemes and monetary policy support.

However, access to credit was affected somewhat by the pandemic. The survey on Industrial and Service Firms carried out by the Bank of Italy points out that the SME rejection rate rose to 6.1 per cent, half the peak recorded in 2012 but 2 percentage points higher than a year earlier.

Business borrowing rates reached the lowest level since 2007, also bolstered by the highly accommodative stance of monetary policy. As the cost of credit held virtually unchanged for large enterprises, the interest rate spread between average SME and large firm rate plummeted to 0.8 per cent.

Collateral requirements remained stable prior to the crisis: in 2020 SME loans backed by real guarantees fell to 53 per cent, down from the average level of 57 per cent recorded over the last four years. The extensive use of public guarantee schemes contributed to this trend.

Credit quality improved further in 2020, benefitting from moratoria and guarantees on new loans introduced by the Government after the outbreak of the pandemic and the flexibility allowed under the rules for classifying loans, as indicated by the supervisory authorities. The ratio of SME new non-performing loans (NPLs, which include bad debts) to outstanding loans reached the lowest level in fifteen years (see Figure 23.4). The stock of non-performing exposures dropped considerably, due to their further disposal during the pandemic.

Total early stage and expansion capital investments plummeted by nearly 40 per cent in 2020, after remaining unchanged in the previous year (see Table 23.3). Resources directed to small and medium-sized firms increased moderately, entirely driven by a sustained growth in the early stage segment and an increase in investment in technology transfer, which more than offset the drop in expansion capital resources.

Access to the stock market, though still limited, broadened in recent years. However, in 2020 initial public offerings (IPOs) were less numerous than those planned at the beginning of the year and those carried out before the pandemic. SME listings mostly occurred on the Alternative Investment Market (AIM Italia), a second tier market with simplified admission procedures.

Online financing channels, albeit restricted in volumes, continued to grow at a sustained pace. Equity crowdfunding – originally intended for start-ups and later extended to innovative SMEs – now enables all SMEs to raise capital through dedicated online platforms: in the twelve months ending in June 2020, alternative financing flows for SMEs amounted to EUR 76.6 million, up by more than 50 per cent over the previous period. Lending crowdfunding provided EUR 179.6 million, more than double compared to the previous year.

After a sharp upswing recorded during the global financial crisis, payment delays started declining in subsequent years. The trend reversed during the lockdown, and then returned close to pre-pandemic levels at the end of the year. According to Payline database, which tracks the commercial transactions of over three million Italian businesses, the widespread increase of the indicator was more marked for micro firms (14.6 days, up from 13.0 in 2019) than for SMEs and large businesses (10.9 and 15.0 days respectively, up from 9.7 and 14.5; see Table 23.4).

Bankruptcies fell for the sixth year in a row since the onset of the global financial crisis: 7 647 Italian companies went out of business in 2020, down by more than 30 per cent on the preceding year. The incidence of insolvencies dropped again to 13.4 per 10 000 enterprises. The sharp decline in the number of business failures, the highest recorded in more than a decade, can be partly explained by the moratorium on bankruptcies, in force from the beginning of March to the end of June, and the general slowdown in court activity due to the pandemic containment measures.

The Government launched a broad and comprehensive action plan to mitigate the effects of the pandemic on the productive system. The measures to support access to credit focused on public loan guarantee programmes, at first with the Decree Law 18/2020, converted into Law 27/2020 (“Cure Italy” Decree) and then with the Decree Law 23/2020, converted into Law 40/2020 (“Liquidity Decree”), aimed at the majority of Italian companies; liquidity relief was ensured by ex lege and private moratoria.

The strengthening of the Central Guarantee Fund for SMEs has allowed:

  1. a. the eligibility of mid-caps (250-499 employees) and of firms with less balanced financial conditions, while in any case excluding firms with exposures classified as bad loans;

  2. b. the increase in the maximum amount guaranteed per firm from EUR 2.5 million to EUR 5 million;

  3. c. the provision of the guarantee at no charge;

  4. d. the rise of the coverage to 90 per cent for all loans with pre-set characteristics in terms of maturity and maximum amount;

  5. e. the automatic granting, i.e. without prior authorization on the part of the Fund, of loans of less than EUR 25,000 (now increased to EUR 30,000), fully covered by the state-backed guarantee;

  6. f. the elimination of the creditworthiness assessment by the Fund;

  7. g. the access to the instrument for individuals whose businesses were damaged by the health emergency;

  8. h. the extension of the intervention – under certain conditions – to debt rescheduling.

Subsequent legislative provisions have progressively increased the Fund’s endowment; the duration of the measure, of a temporary nature, has been extended several times; lastly, at the time of writing, Decree Law 73/2021 (‘Support-bis”) has prolonged the deadline of the extraordinary operations of the Fund, formerly set for 31 December 2020, to 31 December 2021. As envisaged by the 2021 Budget Law (Law 178/2020), access to the Fund for mid-caps has expired on 28 February; these firms can now tap the ‘Guarantee Italy’ programme delivered by SACE until the end of the year. This choice aims at bringing the Central Guarantee Fund back to its original support mission for SMEs.

The State guarantee system has been strengthened by giving SACE, whose tasks have been redefined, the role of providing public guarantees with coverage percentages that decrease from 90 to 70 per cent as firm size increases. The initiative, aimed at large firms, has also been extended to SMEs that have exhausted their ability to access the Central Guarantee Fund. At the time of writing, Decree Law 73/2021 (‘Support-bis”) has extended the initiative until 31 December 2021.

Article 56 of the “Cure Italy” Decree has introduced a debt moratorium for SMEs that have no debts classified as non-performing at the date of entry into force of the decree but that are facing a temporary liquidity shortage owing to the COVID-19 crisis, attested by self-declaration. Specifically, it was initially envisaged to: (a) freeze the amounts authorized for revocable credit lines and for loans granted against advances on receivables until 30 September 2020; (b) defer until 30 September 2020 the repayment of loans maturing prior to that date; (c) suspend mortgage instalments and lease payments during the same period. This initiative has been extended several times, most recently by Decree Law 73/2021 but only for the capital share.

The ex lege measure has been accompanied by the private moratorium promoted by the Italian Banking Association, which allows participating banks and financial intermediaries to suspend loan instalments up to one year and lengthen their maturity by extending the measure ‘Imprese in Ripresa 2.0’ to the operations outstanding as of 31 January 2020 for companies affected by the crisis. The initiative has been revised several times to extend its duration, the number of beneficiaries and the scope of operations, by including firms that had no debt classified as non-performing as of 3 January 2020 (while excluding those with exposures classified as bad loans) and prolonging the suspension period up to 24 months for companies operating in sectors or production chains most affected by the pandemic.

The emergency measures, designed to support the companies affected by the consequences of the pandemic, were later flanked by more selective initiatives, aimed at encouraging investment and capitalisation of firms. In particular, Decree Law 34/2020, converted into Law 77/2020 (the ‘Relaunch’ Decree), has introduced a new major package of initiatives to support the economic activity, such as straight grants to certain categories of firms with turnover not exceeding EUR 5 million, provided that they recorded a 33 per cent decrease in turnover in April 2020 compared to the same month of the previous year; fiscal incentives for equity investment in non-financial firms with revenues between EUR 5 and 50 million; a subordinated loan scheme (‘Fondo Patrimonio PMI’) for medium-sized enterprises that have approved and executed a fully paid capital increase not lower than EUR 250,000.


Bank of Italy (2020a), Annual Report for 2019, Ordinary Meeting of Shareholders, Rome. https://www.bancaditalia.it/pubblicazioni/relazione-annuale/2019/en_rel_2019.pdf?language_id=1

Bank of Italy (2020b), Financial Stability Report, November 2020, Rome. https://www.bancaditalia.it/pubblicazioni/rapporto-stabilita/2020-2/en_FSR_2-2020.pdf?language_id=1

Bank of Italy (2021a), Financial Stability Report, April 2021, Rome. https://www.bancaditalia.it/pubblicazioni/rapporto-stabilita/2021-1/en_FSR_1-2021.pdf?language_id=1

Bank of Italy (2021b), Annual Report for 2020, Ordinary Meeting of Shareholders, Rome.


Bank of Italy (2021c), Bank Lending Survey, Rome. https://www.bancaditalia.it/statistiche/tematiche/moneta-intermediari-finanza/intermediari-finanziari/indagine-credito-bancario/index.html?com.dotmarketing.htmlpage.language=1

Bank of Italy (2021d), Survey of Industrial and Service Firms in 2018, Rome.


Bank of Italy, Economic Bulletin, various issues, Rome.

S. De Mitri, A. De Socio, V. Nigro, S. Pastorelli (2021), Financial support measures and credit to firms during the pandemic, Bank of Italy, Occasional Papers, No. 666, December.

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