THINK-LAB & ADVICE:
I minibond per finanziare la tua azienda

SMARTECHT, through aggreements with partners and investors, deal with issue of euro minibond for SMEs

Smartecht has always been strong supporter of the disintermediation and diversification of sources of funding and commercial guarantee. In a much more convinced way in the period following the ongoing health emergency. In the economic recovery phase, the Italian economic scenario will present great challenges for small and medium-sized enterprises that intend to develop their businesses and therefore need new capital. Even medium and small Italian companies, which today (90%) have the banking system as their only interlocutor, can directly address the capital market and issue alternative financing instruments such as MINI-BONDS. Very often, small and medium-sized enterprises face serious difficulties (often blamelessly) in financing themselves from the banking system. The problem is in fact so widespread that even companies that see glimpses of growth and development face stringent limits and plaster casts. This is often due to problems accumulated over time by the banks, which are no longer able to carry out their primary function in the territory as they are facing a phase of crisis that they are still unable to overcome completely.

Bonds and SMEs

Minibonds are debt securities issued by small and medium-sized enterprises and subscribed by professional and qualified investors. They may be issued by joint stock companies, limited liability companies and by hedging companies and mutual insurance companies. In terms of size, small businesses (less than 50 employees and balance sheet or annual turnover of less than 10 million euros) and medium-sized enterprises (less than 250 employees and annual turnover below 50 million euros or state assets can issue minibonds). assets of less than 43 million euros). Banking companies, SIMs or asset management companies and in any case companies that are part of a banking group subject to the supervision of the Bank of Italy or micro-enterprises (less than 10 employees and annual turnover or balance sheet below 2 million cannot issue minibonds) Euros The substantial tax advantages are among the main reasons why an SME decides to use this form of financing

MAIN ADVANTAGES:

Diversification of funding sources. The diversification / remodulation of funding sources (between short and medium term) leads to an increase in credit standing often accompanied by a lowering of the cost of debt for the company.

Deductibility of interest expense and costs. Interest expense paid by the company is deductible like normal bank interest. All costs incurred by the company to issue the minibond (advisory, legal, listing and others) are fully deductible in the year in which they were incurred.

It offers visibility. It is a process that gives the issuer great visibility, just think of the minibond’s listing on Extramot Pro, press releases, roadshows and much more.

It introduces institutional investors to the business reality. This operation allows the company to make itself known to institutional investors with consequent obvious advantages for any subsequent transactions (private equity, IPO etc.)

Improve financial planning. Issuing a minibond means being able to plan one’s future with serenity; the company that issues a minibond knows for sure and without surprises how much and when it spends

Guarantees not always necessary. More than 80% of current issues do not provide for any collateral (for example a guarantee).

It does not weigh down the Central Credit Register. In fact, not falling within the forms of financing provided by the banking system which are recorded in CE.RI.

The company can reduce cash outflows. When the issue is of the bullet type, during the life of the loan only the interest on the loan is paid to the investor (through coupon flows), so that it can wait for the investments made to produce the desired returns.

Average loan term increases. The minibond can make the financial statements more consistent with the average maturity of the assets.

FOR ISSUERS:

The issuing companies can deduct the interest expense linked to the loan up to 30% of their gross operating result if the minibonds are listed on European regulated markets or multilateral trading systems or on a “white list” (which exchange tax information with Italy) or if they are held by professional investors who do not directly or indirectly control (also excluding trustees and third parties) more than 2% of the issuer’s capital or assets. The issue of bonds is historically known to listed companies, but the crisis, the restriction of bank credit and the opportunity to provide Italian SMEs with alternative financing channels have prompted the Italian legislator to widen the audience of possible debt securities issuers. to smaller companies

FOR THE UNDERWRITERS: 

Again with the intent of an incentive to use these alternative forms of business financing, benefits are also provided for the underwriters of the minibonds themselves. In particular, with the Growth Decree and the Competitiveness Decree for minibonds listed on regulated markets or multilateral trading systems of EU countries or on “white lists” and for those not listed but held by qualified investors, it provides for the exemption of the withholding tax regime 26% down payment at source on interest and other income. This is a significant advantage for pension funds, banks and insurance companies. The investment in minibonds has also been opened over time to Special Purpose Vehicles (SPVs), i.e. vehicle companies specializing in securitisations which therefore may also involve these debt securities.

Lastly, it was envisaged that banks, financial intermediaries and managers, for individual minibond subscription transactions or on minibond portfolios, could ask the Central Guarantee Fund for guarantees, in fact, up to 50% of the nominal value of the minibond subscribed. (if there is a repayment in installments based on an amortization plan) or up to 30% in the case of a minibond bullet (i.e. with a single repayment at maturity). Clearly, several non-strictly regulatory requirements are needed to attract professional investors and persuade them to invest in the debt of an unlisted SME. In general, these include a turnover of at least 5 million euro, which has grown over the past 3 years at least, a competent and reliable management, an EBITDA that reaches at least 10% of the turnover, a PFN / Ebitda ratio below 4x and possibly a rating public (with investment grade creditworthiness) issued by an agency. The price of minibonds is not strictly mandatory, but several factors make it advisable in many cases. In February 2013, the ExtraMOT PRO market of Borsa Italiana was born, aimed precisely at alternative channels to bank loans such as project bonds, financial bills, ABS (asset backed securities), participatory instruments and bonds: this is the which minibonds are ideally aimed at. ExtraMOT PRO is not strictly a regulated market but a multilateral trading system dedicated to professional investors, the only ones who can invest in minibonds. (source: Bank of Italy)