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Corporate mortgages: how to suspend installments

The moratorium on corporate mortgages is the result of an agreement between ABI, the Italian Banking Association, and the main Italian business organizations, including the Alliance of Italian Cooperatives, Cia Claai, Coldiretti, Confagricoltura, Confapi, Confedilizia, Confetra, Confindustria and Business Network Italy. The moratorium is a measure that suspends some payments linked to mortgages contracted by companies to support their productive activities, granting them a more accommodative repayment plan from the debts owed to banks. In this way, we try to lighten the debt situation in Italy.

The agreement between ABI and trade associations was signed in 2015 and is in force until 31 December 2017 . The agreement is composed of three components: “Companies in recovery”, which concerns, in fact, the suspension of the loan to companies ; “Developing companies”, which proposes new forms of financing for business development projects; “Businesses and Public Administrations”, a tool aimed at simplifying the reimbursement of company credits accrued vis-à-vis the public administration.

Returning to the moratorium on loans for businesses

loans for businesses

This procedure provides for the suspension for 12 months of payment of the principal amount of the loan repayment installments. The suspension of the capital quota also extends to the leases of real estate and movable assets, including subsidized ones. In addition to the moratorium, it also provides for an extension of the amortization plan up to 3 years for unsecured loans and 4 years for mortgage loans, the most common.

Concretely, what does this measure mean?

contracted loan

The company that has contracted a loan and adheres to the moratorium procedure, may not pay the installment share for 1 year: this does not mean that it will not have to pay anything. The interest rate remains to be paid to the bank every month: the interest rate will therefore be payable even during the period of suspension of loans for companies. The unpaid portion will be spread over the subsequent period of extension of the repayment period.

Among the requirements to be able to access these measures, the company must be “performing” : when the company applies for a moratorium on mortgages, the company must not have debts classified as “bad loans”, “unlikely to pay” or exposures overdue by more than 90 days. Furthermore, the company must not have requested a suspension for the same loan in the previous 24 months.

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