We are happy to announce our community of Lenders that the Italian State Guarantee, the “Fondo di Garanzia”, is now available for Italian Lendix Projects. The guarantee will partially cover Lenders in case of default. The guarantee lowers the risk of the loan, helping SMEs access credit and decreasing the risk profile for lenders.
How does this guarantee reduce the risk of the loan?
As the outstanding capital of Italian projects in default is partially guaranteed by the Italian State (at least 40% and potentially up to 80%), the risk of the loan is lower than on an unsecured project. Example: on an Italian loan in default whose outstanding capital is 100 €, with the guarantee you recover 40 € minimum vs. potentially 0 € on an unsecured project.
Lendix is the only platform in Italy offering this state guarantee to individual lenders.
What is the scope of “Fondo di Garanzia”?
The so-called “Fondo di Garanzia” is a state guarantee set up by the Italian Ministry of Economic Development with the aim of helping SME’s access to credit. It will reduce the investment risk for projects eligible to the guarantee. It is a potential loss mitigant for all Lendix investors on loans to small and medium-sized enterprises.
Which Italian companies are eligible to the guarantee?
Italian SMEs (except from the Tuscany region) up to 250 employees,
- With an annual revenue below 50 million euros,
- Total assets below 43 million euros,
- Not active in the following sectors: agriculture, forestry and finance,
- We will specify on the platform whether a project is eligible or not, so you can make your lending decision with the correct information.
Are all Lendix Lenders covered by this guarantee?
Alignement of interest is one of the principles of Lendix. This means that on all our projects, the amounts received from the loans are shared equally (“pari-passu”) between all the lenders according to the amount they have lent. This will also be the case for the amounts coming from the “Fondo di Garanzia”.
Normally individual investors are not eligible for this guarantee, as it can be requested by financial institutions and institutional investors only. However, thanks to our unique mix of private and institutional lenders, Lendix is the first Italian platform able to offer this kind of guarantee to individual lenders as well, regardless of their country of origin.
When is the guarantee activated?
In case of borrower default, Lendix will act as agent of the lenders to activate the guarantee. From the first eventual late payment, if Lendix evaluates the chances of recovery from the borrower as lower than the coverage of the guarantee, we will have the right to activate it. Lendix will collect on behalf of the Fund the amount guaranteed. As mentioned before, the guaranteed amount will be shared «pari passu» with all Lenders (Fund and Individuals).
What is the cost of the guarantee?
It is free for the Lenders as it will be paid by the borrower.
What is the impact on the Lender Portfolio?
The guarantee reduces the risk of capital loss.
What are the advantages on the borrower side?
The guarantee reduces the risk profile of the loan, therefore allowing the borrower to obtain more favorable loan conditions.
As a reminder, and even if this guarantee reduces the risk of the loan, the best investment strategy is the diversification of its loan portfolio on a minimum of 50 projects. To learn more about diversification consult our dedicated tutorials.
If you want to know more about how to apply the Italian guarantee fund, it’s here.