At a time when the French President has announced the country's reconfinement, new measures to support companies and businesses weakened by the crisis have been unveiled. These include the possibility of banks granting a one-year deferment on repayment of state-guaranteed loans to businesses in difficulty who request it. Here's a closer look at the extension of this grace period.
PGE repayment: an additional one-year deferral
In October, the worsening health crisis prompted the government to review its business support strategy. Several measures were taken, including a 6-month extension of the PGE scheme, which was initially due to expire at the end of 2020.
Distributed by banks since March, state-guaranteed loans enable companies to obtain financing representing up to 25% of their sales, with 90% of the amount guaranteed by the state. To date, over 600,000 companies have taken out this type of loan, worth a total of 123 billion euros.
In response to the difficulties encountered by professionals, Bruno Le Maire has announced the possible deferral of repayment of EMPs. While the first repayments were due to begin one year after the loan offer was signed, certain companies will be able to ask their bank for a further year's deferment. However, the duration of the loan remains limited to a maximum of 6 years.
"This will give restaurateurs, hoteliers and anyone else who has taken out a loan two years to start repaying it," said Bruno Le Maire on RMC/BFMTV.
Deferred repayments not classified as defaults
The Minister for the Economy and Finance has indicated that he has obtained a ruling from the Banque de France that these deferred repayment requests are not to be considered as defaults, so as not to stigmatize the companies benefiting from them. This point is also important for the banks, which would otherwise have been forced to book the loans as losses.
Last but not least, the French government reminds us that companies unable to obtain credit can turn to its direct loan scheme. These loans, ranging from €10,000 to €50,000, are intended for companies with fewer than 50 employees in financial difficulty, who have been unable to obtain a satisfactory financing solution from the banking networks. These are amortizable loans, taken out for a maximum of 7 years and granted at an annual rate of 3.5%. During the first year, the subscriber pays interest only. A digital platform has been available since October 14, enabling companies to submit their loan applications easily. They will receive a reply within 15 days.