FCA is seeking to shore up liquidity after burning through $5.5 billion in the first quarter while its plants were shuttered and new-car demand stalled.
The automaker has gradually restarted its operations in Italy since the end of last month after they were closed due to government coronavirus lockdowns. The automaker on Tuesday released plans detailing how it will resume North American production.
FCA runs several plants and research and development centers in Italy, directly employing around 55,000 people. In addition, more than 200,000 people work in Italy's 5,500 parts suppliers and 120,000 people in car dealers and service companies, with the automotive industry accounting for 6.2 percent of Italy's domestic product, FCA said.
Companies using the program must not approve dividend payments for a year.
FCA and Peugeot maker PSA Group decided earlier this week to scrap the 1.1 billion-euro dividends that each agreed to pay as part of their agreement to merge to create the world's fourth-largest automaker. However, as part of the tie-up deal, FCA is also due to pay to its shareholders a special dividend of 5.5 billion euros just before the closing of the merger, which the two automakers confirmed was expected before the end of the first quarter of next year.
Intesa Sanpaolo would act as lead lender and the loan to FCA would be issued by a pool of banks, a source told Reuters.
The loan would be the largest financing guaranteed by a European government during the pandemic after Renault's 5 billion-euro deal last month.
In the first quarter, FCA's industrial free cash flow was a negative 5 billion euros. But the company said it had available liquidity of 18.6 billion euros as of March 31, including a 6.25 billion revolving credit facility which was fully drawn down in April. Last month, FCA also completed the syndication of a 3.5 billion euro credit facility with banks.
In a May 5 call with financial analysts, CFO Richard Palmer said the automaker's cash burn in the second quarter would be likely worse than the first quarter because plants remained closed in April and part of May.