Public investment bank Bpifrance has set up a new scheme to help the tourism sector, which has been hard hit by the health crisis. The FAST (Fonds Avenir et Soutien Tourisme) fund is designed to support very small businesses and SMEs, using a model similar to the government's own equity loans.
Bpifrance's Avenir et Soutien Tourisme fund
The FAST fund, which falls into the category of investment offerings, is already up and running. Endowed with 80 million euros, the FAST fund aims to support over 300 companies in the tourism sector, through investment tickets ranging from 50,000 to 400,000 euros, in the form of convertible bonds.
The tourism sector, which accounts for more than 7% of France's GDP, with 170 billion euros in revenues by SMEs and VSEs in 2019, is one of the hardest hit by the health crisis. Consequently, "the tourism industry requires a massive mobilization of the entire financing and support ecosystem, to support companies that have already demonstrated, in the past, their resilience and great capacity to adapt", declared Nicolas Dufourcq, CEO of Bpifrance, at a press conference.
"The FAST Fund completes Bpifrance's offering for entrepreneurs who need to rapidly strengthen their equity capital, giving them the means to reinforce their transformation efforts. As of today, it is being marketed by the Bpifrance network and will enable us to invest in three hundred tourism and leisure companies over the next twelve months", he added.
To qualify, companies must meet a number of criteria. They must be VSEs and SMEs that were in good health before the crisis, operating in the tourism sector (tour operators, cruise operators, hoteliers, restaurateurs, leisure businesses, etc.), incorporated as a public limited company (SA) or private limited company (SAS), have been in business for at least 3 years, and generate sales of at least 500,000 euros.
A scheme similar to government equity loans
Convertible bonds will be assimilated to quasi-equity, and will only have to be repaid in the event of default, which will have no impact on companies' ability to take out other loans. They will have a term of 7 to 8 years, and the interest rate for the lender is set at 3.5%, plus a redemption premium of 3.5% on maturity of the convertible bond, giving a rate of 7%.
The operation of the FAST fund is therefore very similar to that of the equity loans that the government is working on in collaboration with insurance companies, banks and other investors as part of the stimulus package.
It completes the existing aid package for the tourism sector, which comprises 3 components: financing offers, investment offers and support offers. The Fonds France Investissement Tourisme 2 (FIT 2) is a new addition to the FAST investment fund. It is aimed at SMEs and small ETIs, with investment tickets ranging from 400,000 to 7 million euros.
Businesses in the tourism sector can also benefit from various financing options, such as the Tourism Loan or the state-guaranteed loan known as PGE Saison, the amount of which is capped at the best 3 months of 2019.
Finally, they can benefit from a range of support services offered by Bpifrance, such as the personalized "Autodiag Rebond" assessment, Rebond e-trainings and the 360 Rebond Tourisme entry module, designed to help companies in the tourism sector identify new opportunities.