Financing SMEs and Entrepreneurs 2026: Italy
Table of contents
Small and medium-sized enterprises (SMEs) dominate the business landscape in Italy, accounting for a large share of value added and employment.
The Italian economy experienced modest growth in 2023, marking a significant slowdown compared to the previous year, partly due to the waning recovery in activities most impacted by the pandemic and the tightening of monetary conditions. GDP growth remained moderate throughout the following year and into the first months of 2025, supported by the continued positive trend in consumption and construction spending.
Financial market conditions were mainly affected by the gradual easing of monetary policy tightening throughout 2024; since the autumn, they were also impacted by geopolitical and trade tensions, heightening uncertainty regarding the macroeconomic outlook.
The decline in bank lending to SMEs deepened during 2023 and 2024, amid sluggish credit demand. The drop was much more moderate for large firms, nearly coming to a halt in the early months of 2025.
Lending standards continued to tighten in 2023 and much of the following year, reflecting lower risk tolerance and heightened risk perception. The easing of credit supply policies, primarily observed from the final quarter of 2024, mainly benefitted large firms. After the spike in 2023, business borrowing rates edged down in the following year; collateral requirements held stable and low by historical standards.
Credit quality remained good. The ratio of SME new non-performing loans to outstanding loans rose slightly in 2024, but the overall quality of the assets held by banks remained virtually unchanged. The stock of non-performing loans declined further.
Early stage financing for SMEs experienced a modest rise in 2024, following the steep drop of the previous year. Conversely, the upswing in expansion capital observed in 2023 was replaced by a moderate decline, affecting both SMEs and, to a greater extent, large enterprises.
Business-to-business payment delays, which had been declining after the increase recorded during the pandemic, reached a new low in 2024. The decrease was more pronounced for micro firms than for large enterprises, while remaining virtually unchanged for SMEs.
After the decline observed in 2022, the number of judicial liquidations rose in the following two years, reaching a level still significantly lower than that recorded in the ten years preceding the pandemic. This trend may have been driven by the increased use of debt restructuring tools, encouraged by some provisions of the new Business Crisis and Insolvency Code.
Financial support measures continued to help small businesses face the challenges caused by the increased volatility surrounding macroeconomic trends.
Credit guarantee schemes have traditionally played a key role in easing SME access to finance. A temporary framework for loans backed by the Central Guarantee Fund was introduced for 2024, based on more favourable conditions than those in place before the pandemic, but less advantageous than those implemented after the outbreak of the conflict in Ukraine.
The Italian economy recorded modest growth in 2023, showing a sharp slowdown compared to the previous year, partly due to the fading recovery in the activities most affected by the pandemic and tighter monetary conditions. GDP growth remained moderate throughout the following year and in the first months of 2025, when it was buoyed by the still positive trend in consumption and construction spending.
Italian financial market conditions were mainly affected by the monetary policy stance and expectations surrounding future developments in key interest rates. The sharp deceleration in energy price growth drove the disinflation process, which began at the start of 2023 and gained strength in the course of the year. The ECB tapered its restrictive monetary policy in 2024, amid ongoing weakness in economic activity. Financial market conditions were primarily affected by the gradual easing of monetary policy tightening; since the autumn, they were also impacted by geopolitical and trade tensions, heightening uncertainty regarding the macroeconomic outlook.
Small and medium-sized enterprises account for the vast majority of Italian businesses; micro-firms are close to 95% (see Table 2). In 2023, SMEs generated about two-thirds of turnover and value added (see Figure 1).
Notes:
1. Financial and insurance activities are excluded.
2. Data include all market activities in Sections B, C, D, E, F, G, H, I, J, L, M, N of the common statistical classification of economic activities in the European Community as established by Regulation (EC) No 1893/2006 (Nace Rev. 2). Data include firms with and without employees.
Source: Istat.
As a percentage
Source: Istat.
Country definition
In accordance with Eurostat standards, the Italian National Institute of Statistics defines small and medium enterprises as firms with fewer than 250 employees. In detail, microenterprises and small firms have, respectively, fewer than 10 and 10-49 employees, while medium-sized enterprises are defined as those with 50-249 employees.
The SME definition used by financial institutions
The Bank of Italy classifies data on business lending by firm size: small firms are defined as limited partnerships, general partnerships, informal partnerships, de facto companies and sole proprietorships with fewer than 20 workers. This data disaggregation has been used for most indicators on the debt side.
The contraction in bank lending to SMEs intensified during 2023 and 2024 in a context of subdued credit demand and persistently tight credit standards. The drop was much more moderate for large firms, as it nearly came to a halt in the early months of 2025. The share of SME loans in total business loans declined further to 15.4%, marking a new low since 2007. Trends in loan maturities confirm the shift from short-term to long-term lending in recent years, a development that likely reflects the need to address heightened economic uncertainty.
Year-on-year change, as a percentage
Source: Bank of Italy.
Lending standards kept tightening in 2023 and for much of the following year, still reflecting lower risk tolerance and higher risk perception. According to the results of the euro area bank lending survey (BLS), following the start of the monetary policy rate-cutting cycle in June 2024, Italian banks only modestly relaxed their credit supply policies for businesses. This easing, which was predominantly observed from the final quarter of 2024, mainly benefitted large firms and came after a period of more pronounced restrictions during the phase of monetary tightening (see Figure 3).
Diffusion index
Note: SMEs have an annual net turnover of up to EUR 50 million. The dates reported in the table coincide with the month following the quarter covered by the survey.
Source: Euro area bank lending survey (BLS).
According to the Bank of Italy's Survey on Industrial and Service Firms, in 2024 the rejection rate, defined as the share of SMEs reporting that they were denied some or all of the credit they requested, dropped to a record low of 1.8% since 2007, marking a 4 percentage point decrease compared to the value recorded during the pandemic crisis.
Following the spike in 2023, driven by the pass-through of the ECB’s key interest rates to loan costs, business borrowing rates edged down in 2024, though still standing at historically high levels, especially for small enterprises. The interest rate spread between the average SME and large enterprise rate narrowed significantly.
Collateral requirements held stable compared to the previous two years, though still low by historical standards. In 2024, 53% of SME loans were backed by real guarantees, marking one of the lowest values in the last eighteen years.
Credit performance remained solid. The ratio of SME new non-performing loans (NPLs, which include bad debts) to outstanding loans rose slightly in 2024, but the overall quality of the assets held by banks remained virtually unchanged over the period. The stock of non-performing loans declined further.
Quarterly flows of NPLs as a percentage of the stock of performing loans at the end of the previous quarter
Source: Bank of Italy.
Total early stage and expansion capital investment declined slightly in 2024, after remaining virtually unchanged in the previous year (see Table 3). Resources directed towards small and medium-sized firms recorded a modest rise, following a nearly 40% drop in the previous year. Conversely, the upswing in expansion capital observed in 2023 was followed by a moderate decline, affecting both SMEs and, to a greater extent, large enterprises.
In EUR million
Source: AIFI-PwC.
New stock market listings, which in 2023 were higher than the average of the previous three years, decreased. Most transactions, however, were concentrated in the segment dedicated to small businesses.
Fundraising through online financing channels remained subdued. In 2024, equity crowdfunding, which enables SMEs to access capital via dedicated online platforms, and lending crowdfunding, through which loans are funded by retail investors using digital channels, exhibited signs of weakness.
Business-to-business payment delays, which had been declining after the upswing recorded during the pandemic, decreased further overall. According to Payline database, which tracks the transactions of more than three million Italian companies, in 2024 the decline was more pronounced for micro firms (9.0 days, down from 10.4 in 2023) than for large enterprises (10.1, down from 10.7), while stabilising for SMEs at 7.6 days (see Table 4).
Average number of days
Source: Cerved, Payline database.
After the decline observed in 2022, the number of judicial liquidations increased in the following two years, reaching just over 9 000 in 2024, a figure still significantly lower than that recorded in the ten years prior to the public health emergency (see Figure 5).
The lower reliance on judicial liquidations in the last years compared to the period before the pandemic reflects both the improvement in the economic and financial conditions of businesses, as well as the selection processes that have taken place over the last decade, which led to the exit from the market of the more vulnerable ones. Additionally, the more frequent use of debt restructuring tools, supported by certain provisions of the new Business Crisis and Insolvency Code, may have contributed to this trend.
Number; year-on-year change
Source: Cerved.
The challenges faced by small businesses continued to be mitigated by public support measures designed to manage the increased volatility surrounding macroeconomic trends.
Credit guarantee schemes have long been essential in facilitating SME access to financing. In 2024 the Central Guarantee Fund for SMEs provided nearly EUR 30 billion in guarantees for EUR 42.5 billion worth of loans (see Figure 6).
Flows, in EUR billion
Source: MedioCredito Centrale.
In recent years, its operativity has undergone several changes. A temporary framework for loans backed by the Fund was introduced for 2024, based on more favourable conditions than those in place before the pandemic, but less advantageous than those implemented after the outbreak of the conflict in Ukraine. In particular, coverage based on the different tiers of the Fund's assessment model were partially reinstated, along with the exclusion of higher-risk companies falling within the fifth tier of the Fund's assessment model. The 2025 Budget Law extended the temporary framework for loans guaranteed by the Fund for 2025, introducing certain changes compared to the previous rules. In particular, among the regulatory provisions, the maximum guarantee coverage for loans granted for liquidity needs has been reduced; in addition, it has been clarified that companies with fewer than 250 employees that exceed one or both of the financial thresholds set out in the EU definition of SMEs may access the guarantee for individual transactions as well as for an investment portfolio.
Within the wider context of government policy responses to the crisis and, simultaneously, to the challenge posed by the ‘twin transition’, Italian public authorities also introduced or reinforced measures targeting start-ups and innovative SMEs. The National Innovation Fund (CDP Venture Capital Sgr) was set out in the 2019 Budget Law to streamline public resources devoted to innovation, while acting as a catalyst for private and international capital. With an initial endowment of EUR 1 billion, it now manages assets worth more than EUR 4.7 billion.
In 2022, CDP Venture Capital Sgr also began managing the Digital Transition Fund and the Green Transition Fund, funded by the National Recovery and Resilience Plan, part of the Next Generation EU programme. With a budget of around EUR 400 million, the Digital Transition Fund aims to promote the digital transformation of supply chains through direct and indirect venture capital investments.
The Green Transition Fund supports the growth of an innovation ecosystem through direct and indirect venture capital investments in green transition sectors, such as renewable energy, circular economy, sustainable mobility, energy efficiency, waste management and energy storage, mobilising EUR 250 million.
More broadly, CDP Venture Capital’s goal is to foster innovation in strategic sectors that drive national growth, including Artificial Intelligence (AI) & Cybersecurity, AgrifoodTech, Spacetech, Healthcare & Life Science, Cleantech, IndustryTech, and Infratech & Mobility.
In 2024, CDP Venture Capital Sgr launched the AI & Cybersecurity Fund aimed at supporting market growth and the adoption of AI, while promoting the ethical and responsible development of the AI ecosystem, with a total allocation of EUR 450 million.
Source: Table 1
References
Bank of Italy (2024a), Annual Report for 2023, Ordinary Meeting of Shareholders, Rome.
Banca d’Italia - Annual Report for 2023
Bank of Italy (2024b), Financial Stability Report, November 2024, Rome.
Banca d’Italia - Financial Stability Report, No. 2 - 2024
Bank of Italy (2025a), Financial Stability Report, April 2025, Rome.
Banca d’Italia - Financial Stability Report, No. 1 - 2025
Bank of Italy (2025b), Annual Report for 2024, Ordinary Meeting of Shareholders, Rome.
Banca d’Italia - Annual Report for 2024
Bank of Italy (2025c), Bank Lending Survey, Rome.
Bank of Italy - Bank Lending Survey (BLS) (bancaditalia.it)
Bank of Italy (2025d), Survey of Industrial and Service Firms in 2024, Rome.
Bank of Italy - Survey of Industrial and Service Firms (bancaditalia.it)
Bank of Italy, Economic Bulletin, various issues, Rome.
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