Introduced at the time of the first containment, the state-guaranteed loan is an exceptional scheme designed to make it easier for companies and professionals to obtain bank financing to help them cope with the economic consequences of the Covid-19 crisis. Here's what you need to know about the PGE and how to obtain it.
Definition of a state-guaranteed loan
This scheme was set up in March 2020 thanks to coordination between the Ministry of the Economy and Finance, the French Banking Federation (FBF) and Bpifrance. It was set up as an emergency measure to help companies facing cash flow challenges linked to the coronavirus crisis.
In practical terms, this scheme involves the State guaranteeing 70% of the loan amount for large companies, and up to 90% for small businesses. It's important to note that the state-guaranteed loan is a bank loan. No repayments are required in the first year. Companies are free to spread repayment over a maximum period of 6 years.
The banks are committed to distributing EMPs on a massive scale, and to examining and responding promptly to any requests they receive.
Who is eligible for a government-backed loan?
The PGE is open until June 30, 2021 to all companies, whatever their size or legal form. Businesses in the hotel, restaurant, events, sports, leisure and cultural sectors can obtain a "season" PGE from their bank on more advantageous terms.
However, certain structures are not eligible for this scheme: credit institutions, finance companies and companies that were in receivership before 2020.
How much is the EMP?
The state-guaranteed loan can represent up to 3 months' sales. For start-ups, the amount can be up to 2 years' payroll.
It is also possible to apply for several loans together. In this case, the cumulative amount of financing must not exceed 25% of sales or 2 years' payroll for an innovative company.
How to obtain an EMP
There are two possible approaches, depending on the size of the company and its sales.
Companies with fewer than 5,000 employees and sales of less than €1.5 billion in France can apply to their bank for an EMP. Once they have obtained pre-approval, they must go to the attestation-pge.bpifrance. fr platform to retrieve their unique identifier, which will enable the lender to grant the financing.
Companies with 5,000 or more employees and sales in excess of €1.5 billion must, after obtaining pre-approval from their bank, submit a request by e-mail to the following address: garantie.etat.grandesentreprises@bpifrance.fr. The application will be processed as soon as it is received by the Direction Générale du Trésor, supported by Bpifrance Financement SA.
What to do if you are refused an EMP?
If you are unsuccessful in obtaining a government-backed loan, you should be aware thatother financing options areavailable, such as :
- the Economic and Social Development Fund (FDES)
- subsidized loans
- repayable advances
- equity loans