Data recently published by the Banque de France show that the number of files deemed eligible in April is double that recorded for the whole of 2019. Many VSE/SMEs are seeing their financial situation worsen as a result of the confinement.
Number of files exceeds 2019 level
Credit mediation was created in 2008, during the financial crisis, to support companies who were refused financing by banks. The coronavirus pandemic has led to an explosion in referrals. Indeed, according to Banque de France data, 1,428 cases have been deemed eligible since April 6 in France, compared with 1,005 in 2019. The organization is thus recording an acceleration in the pace, of 159 eligible applications per day at present. April 16 was a particularly busy day, with 221 referrals.
Until now, however,banks have eliminated almost all bad applications, hiding behind the excuse of poor Banque de France ratings, but Bercy has asked them to take a more serious look at them. This means that they will no longer be able to reject poorly rated applications out of hand.
Very small businesses hardest hit
The Governor of the Banque de France points out that the companies most in difficulty are very small businesses (with fewer than 10 employees). The sectors that most frequently turn to credit mediation are services, retail, accommodation, catering and construction. An increase in the number of referrals had already been observed in recent years in the hotel-restaurant and retail sectors. Today, these professions are particularly exposed to the consequences of confinement.
As a result, credit mediation has never been so much in demand in France, at a time when more and more companies are struggling to find financing in the face of the economic crisis. The institution points out that a large number of cases concerned "the usual requests for denunciations of overdrafts, refusals to increase cash flow loans, or difficulties linked to loan repayment deferrals". However, it reassures us that there is cash available "for everyone".
The European Commission is expected to propose a relaxation of the accounting rules imposed on European banks in the near future, with the aim of freeing up capital and facilitating lending to businesses. Valdis Dombrovskis, the European Commissioner for Financial Services, declared at the end of April that banks should "make the most of the flexibility offered by solvency regulations".