492,000 companies have already benefited from a state-guaranteed loan, for a total amount of 84 billion euros. In an order dated May 6, 2020, the Ministry of the Economy and Finance broadens the eligibility criteria for the PGE to enable more companies to benefit from this scheme.
State-guaranteed loans for companies in difficulty
Initially, companies subject to bankruptcy proceedings (sauvegarde, redressement or liquidation) since January 1, 2020 were ineligible for the state-guaranteed loan.
This is now possible. To qualify for an EMP, companies must meet certain conditions. By December 31, 2019, they must not:
- Be in receivership.
- Be subject to a professional recovery procedure (in the case of individuals).
- Be in the observation period of a safeguard or receivership procedure.
Companies undergoing a recovery plan, whether they are in safeguard or receivership proceedings, before or after the January 1st date, are also eligible for the state-guaranteed loan.
By mid-May, more than 38,300 companies had already secured over €12 billion in state-guaranteed financing.
Certain eligible non-trading property companies
Non-trading property companies were not initially included in the government-guaranteed loan scheme. However, some of them are now eligible to apply for a PGE, because of their social benefits. These are the following SCIs:
- SCI construction-sales companies.
- SCIs (non-trading property companies) whose assets consist mainly of listed or registered historic monuments, and which generate income by welcoming the public.
- SCIs whose capital is wholly owned by real estate investment trusts (OPCIs), real estate investment trusts (SCPIs) or professional real estate investment trusts (OPPCIs).
Crowdfunding platforms can now grant PGEs
Another new development is that online lending platforms with the status of intermediaries in participatory financing can also grant state-guaranteed loans. The terms and conditions are virtually identical to those for EMPs granted by banks: a one-year loan renewable for up to five years, the same government guarantee, and so on. However, the interest rate changes.
In fact, while EIPs granted by banks are zero-interest loans for one year, those granted by crowdfunding platforms have a rate of 2% for the first year. Application fees are limited to 1,000 euros per loan.
Finance companies and credit institutions remain excluded from the scheme.