• Eligible Italian projects are covered by the Italian State Guarantee.
  • When a project is covered, at least 40% of the outstanding amount of a loan is guaranteed.

The Italian State guarantee (Fondo di Garanzia) applies to some of the October Italian projects. In case of default, the guarantee covers at least 40% of the outstanding amount of the loan. This garantee helps SMEs get access to financing and decreases the risk for lenders.

What is the Fondo di Garanzia? 

The Fondo di Garanzia is a State guarantee set up by the Italian Ministry of Economic Development which aims at helping SMEs access credit. 

For borrowers, the guarantee reduces the risk profile of the loan, allowing to get better loan conditions. For lenders, the guarantee reduces the risk of capital loss. 

Which Italian companies are eligible to the guarantee? 

  • Italian SMEs (except those based in the Tuscany region) with up to 250 employees;
  • With an annual revenue below 50 million euros;
  • With a total of 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.

What percentage of the outstanding capital is covered by the guarantee?

The guarantee will cover an amount equivalent to 80% of the part of the loan funded by institutional investors. Since the October fund always invests at least 51% of each project amount, the guarantee will cover a minimum of 40.8% (=80%*51%) of the total outstanding amount of the project. The actual amount covered by the guarantee will be known once the project is fully funded, when the percentage lent by private and institutional investors is known.

For example, if the project is funded at 51% by the October Fund and 49% by private Lenders, the “Fondo di Garanzia” will cover 40.8% of the risk of the loan. If the project is funded at 25% by Private Lenders, the “Fondo di Garanzia” will cover 60% of the risk of the loan. 

Since you cannot predict this percentage, you should be conservative when deciding how much money you want to lend to the project and assume that only 40% of the loan will be covered.

⚠️ The guarantee does not ensure that the guarantee will be enforceable if there is a payment default. Why not? If some documents are missing are do not meet the criteria, the guarantee may not be implemented.

Are all October Lenders covered by this guarantee? 

Alignment of interest is one of the principles of October. Private and Institutional lenders are treated exactly under the same conditions by the Italian State guarantee, regardless of their country of origin. The amount recovered will be shared between all lenders according to the amount they have lent.

When is the guarantee activated?

If the borrower defaults, October will act as an agent of the lenders to activate the guarantee. If October estimates the chances of recovery are lower than the coverage of the guarantee, we are entitled to activate it. October will collect the amount guaranteed on behalf of the Fondo di Garanzia. 

What is the cost of the guarantee?

It is free for the Lenders as it will be paid by the borrower. 

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