First of all, what is the SIMEST Internationalisation Fund?
Managed in agreement with the Ministry of Foreign Affairs and International Cooperation, 394-81 is a multi-measure fund that has been in force for years and grants subsided loans to support the internationalisation projects of Italian companies, thanks to measures aimed at supporting participation in international fairs, exhibitions and system missions (also in Italy), commercial insertion in new foreign markets, the hiring of Temporary Export Managers (TEM), digital managers and innovation managers, the development of e-commerce, the preparation of feasibility studies relating to foreign investments, technical assistance programs, e.g. for in-house staff training and for after-sales assistance linked to a supply contract, and the capitalisation of companies. In short, a broad set of tools that covers practically all the main aspects involved in a company’s internationalisation process.
Tell us about the SIMEST 2021 announcement for the 394 Fund, which was flooded with applications at the beginning of June 2021.
In less than 2 days, over 8,000 applications were submitted on the 2021 SIMEST Internationalisation Fund. An incredible number of requests, that, despite the measures taken, quickly exhausted the 2.1 billion euros allocated. Despite the amount of resources available, the government’s measures were not enough to avoid the early closure of the front office, probably also due to another element that in recent months had facilitated access to the Fund, namely the exemption from providing guarantees for accessing the loans, in force until 30 June 2021. In fact, one of the first innovations introduced last year to meet the needs of companies hit hard by the pandemic, the exemption from providing guarantees greatly streamlined the Fund’s procedures, also reducing the time needed to obtain financing. Having eliminated a player (banks or insurance companies) from the equation, in fact, allowed SIMEST to ensure much shorter and more certain times for processing the case file.
The SIMEST Fund that was back in operation for less than two days, however, was a little different from the one we got to know last year, at the height of the pandemic. While it is true, in fact, that a non-repayable portion of the loan has remained in force, the percentage of aid that does not have to be repaid has fallen from 50% to 25%. As those who follow the events of the 394-81 Fund already know, this is a new change introduced by the DL Sostegni bis (Support Law Decree) which, in addition to allocating new resources, also intervened on this aspect. Until 31 December 2021, therefore, the 394-81 Fund will continue to disburse a portion of the financing at a subsidised rate (0.055% per annum in June) and a portion of non-repayable co-financing up to the limit of 25% of the loan, for a maximum amount of 800 thousand euros per beneficiary company (including any non-repayable portions already approved).
Specifically, what aid have the companies applied for from the 394-81 Fund?
A total of 8,125 applications were completed. Since 2020, we have registered applications from more than 13,000 companies and for a value of approximately 4 billion euros. To give a dimension of the jump in volumes, 870 applications were submitted in 2019 for a value of 290 million.
About half of the applications (45%) concerned financing for trade fairs and exhibitions (for a total value of around 204 million euros), which has recently been extended to include international events held in Italy. This is a low-interest loan on expenses for the exhibition area, logistics expenses, promotional expenses, and consulting expenses related to participation in trade fairs/exhibitions in foreign countries. It also includes system missions promoted by MISE and MAECI and organised by ICE – Agency, Confindustria and other institutions and trade associations.
In second place in terms of number of applications are loans for capitalisation (almost 775 million in equivalent value) which, despite being the only measure of the 394 Fund that no longer has a non-repayable co-financing portion, nevertheless accounted for 20% of the applications received. This is followed, in third place, with about 15% each, by loans for entering foreign markets, for example, with the creation of offices, showrooms, shops or corners, after-sales service centres and related promotional activities (over 930 million euros) and e-commerce (almost 170 million euros). Finally, accounting for less than 5% of the applications received, came feasibility studies, temporary export managers, and technical assistance (a total of around 60 million euros).
I would like to point out that while in 2020 the applications were for capitalisation loans, to deal with immediate liquidity problems, what is positively surprising this year is the fact that the largest part was requested for entering new markets, (i.e. long term investments to establish a presence abroad), which involved one billion of the 2.1 billion requested in recent days, and participation in trade fairs and exhibitions. This seems like a good sign.
E-commerce experienced a disproportionate boom in 2020, catching many Italian SMEs unprepared for this online business model.
In fact, in response to these difficulties, a new digital export bonus was specifically created. This is a tool for the digitalisation of exports, which consists of a voucher that will be available to micro, small and medium-sized enterprises. The use of digital technology to support some key activities that precede or follow the sales phase can help Italian companies to be more productive, effective and, ultimately, more competitive in global markets. This will be achieved through increased knowledge of foreign markets thanks to new data processing technologies that reduce costs and time, e-commerce further lowers costs by eliminating any type of intermediation, digital communication systems allow to establish and maintain quality relationships with customers abroad, new technologies in the field of logistics lower transport and storage costs, data-driven decision-making processes are based on reliable and engaging information at company level, and new technologies help marketing processes generate measurable business leads.
The government grant can be used to contact digital service providers to create websites, obtain translation services, plan advertising campaigns or rely on digital intermediation. The need today is to create the conditions to enable as many companies as possible to do business. Digital has been – and is – fundamental and has taught us that it is certainly a valid support. We also know that it cannot completely replace physical events such as trade fairs. Therefore, we must build new ways of fully integrating the opportunities provided by digital technologies.