Companies will probably have to wait until the second half of the year to benefit from the hoped-for effects of the anti-Covid-19 vaccines and return to normal activity. Euler Hermes economists anticipate a sharp rise in bankruptcies in France, from 33,000 to 50,000 by 2021. The aid schemes introduced by the government are deemed insufficient by those concerned. Several other solutions and avenues are now being considered to help companies get through the health crisis.
Consolidation loans
François Asselin, President of the French Confederation of Small and Medium-sized Enterprises (CPME), is proposing the creation of consolidation loans to cover social security and tax debts, with repayments spread over 6 to 10 years. However, the banks carrying these new loans could find their balance sheets weakened and lend less in future. Implementing this solution seems all the more difficult given that the debts contracted by companies to date have not been used for investment, but to ensure their survival. This could make it difficult for them to generate future revenues and thus repay their loans.
PGE: an additional year's deductible
In addition to this measure, the president of the CPME is proposing to postpone repayment of the state-guaranteed loan (PGE) for a further year. As a reminder, the first repayments are due to start in April 2021. However, companies whose activity was once again halted by the curfew will not be able to repay from this date.
Tackling the rent problem
When companies close, they "continue to pay rent", says François Asselin. To avoid penalizing these players, the CPME president suggests "introducing a tax credit".
More specifically, two measures proposed by the CPME are currently being studied by the Ministry of the Economy:
- Use of the security deposit to cancel 3 months' rent
- The introduction of a tax credit for unpaid lessors, in the event that the company encounters payment difficulties.
Covering a portion of salaries
Three French economists, Olivier Blanchard, Jean Pisani-Ferry and Thomas Philippon, are proposing that the State subsidize part of the wages of workers in the sectors most affected by the virus. In concrete terms, this proposal would involve phasing out the short-time working scheme and replacing it with a wage subsidy for employees in the sectors most affected by the Covid-19 pandemic.
Economists point out that these sectors account for between 4 and 9 points of GDP in France. In their opinion, the cost of this measure would be much lower than that of the short-time working scheme. Indeed, if 30% of the salary is paid by the State, public finances can benefit from social contributions on the remaining 70%, and do not have to bear the cost of unemployment compensation. While this proposal will be studied by Bercy, it is not certain that it will be socially acceptable in France.