In May 2020, the European Banking Authority published guidelines on credit granting and loan monitoring (ABE/GL/2020/06): the Bank of Italy implemented these guidelines for banks and financial intermediaries (pursuant to Article 106 TUB) through note no. 13 of 20/07/2021.

These guidelines include a section on creditworthiness assessment for micro-, small, and medium enterprises.

Loans to Micro-, Small, and Medium Enterprises
During the creditworthiness assessment of micro and small enterprises (hereinafter referred to as "client"), the EBA suggests considering several aspects, including:

• Analysis of the client's financial position, in which the entity should take into account both current and prospective financial positions, ensuring that the financial projections used in the analysis are realistic and reasonable. Furthermore, entities should perform a stress test on estimated future financial values such as revenues or cost of raw materials, to assess the sustainability of the loan under adverse economic scenarios.
• Analysis of the client's business model and corporate strategy, in which the entity should evaluate the feasibility of the client's business plan (and the related financial projections).
• The client's exposure to ESG factors, particularly environmental factors and climate change impact, and the adequacy of the mitigation strategies as specified by the client.

The Business Plan is the key document for requesting credit from a financial institution.
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