In a move that bolsters financing for the supply chain of Gucci, Intesa Sanpaolo has inked a deal with the luxury goods group to ease financing for small companies that supply the firm. The Italian retail bank said it would apply the financing conditions that Gucci receives to its suppliers, which would allow them to have less expensive and quicker access to credit, Yahoo Finance reported.
Companies that supply Gucci will have the ability to borrow funds on better conditions that are, for the most part, held for big corporate customers. Intesa said the deal would cover all loans granted under coronavirus-connected crisis liquidity programs. Earlier in the week, Intesa had given the green light to a 6.3 billion euro loan guaranteed by the state for Fiat Chrysler.
Thousands of craftspeople in Italy in the textile, jewelry and leather verticals supply large luxury names that have seen sales drop because of the coronavirus.
In separate news, two automakers are helping cash-strapped suppliers weather shutdowns caused by the coronavirus by paying suppliers upfront. Ford Motor Co. and General Motors Co. have rolled out programs to fast-track payments that usually take as long as 60 days to be paid.
The companies say they are prioritizing the payments as keeping small wholesalers well is key for them as they open their factories again. David Barnas, a spokesperson for GM, said the company rolled out its “Early Payment Program” with Wells Fargo & Co. last summer. They now use it as a method to aid suppliers amid the pandemic.
The supplier receives an earlier payment from Wells Fargo for the invoice under the deal, following the payment of a financing fee. GM, for its part, later pays Wells Fargo the entire amount. The automaker said the difference is the cost of financing connected to its credit rating and not that of the supplier. As a result, smaller firms can harness the financial strength of the car company for lower costs.