Highly solicited by companies in 2020, the Banque de France-backed credit mediation service expects to be faced with a large number of requests as the crisis recedes.
An intense end to the crisis for credit mediation
While the number of business failures was exceptionally low in 2020, due to the various economic support schemes put in place by the State, a sharp rise is expected when the safety nets are withdrawn.
In 2021 and 2022, Credit Mediation expects to have to deal with a large number of cases as the crisis recedes. It estimates that 20,000 companies should have gone bankrupt in 2020, but have survived thanks to state measures, and will automatically face major difficulties when this support ceases.
Furthermore, according to figures from the Banque de France, French companies are increasingly indebted. In February 2021, their debt exceeded 1900 billion euros for the first time, an increase of 12%. What's more, they will need to have access to additional funds if they are to relaunch their business.
However, according to Frédéric Visnovsky, the French National Credit Ombudsman, it is highly likely that banks will refuse to lend these additional funds, and will tighten lending conditions. The recovery could therefore be synonymous with new difficulties for a number of companies.
Mediation in high demand in 2020
Backed by the Banque de France, credit mediation is a public body set up in 2008. Its mission is to help companies facing difficulties with financial institutions, whether banks, credit insurers, lessors or factoring companies.
The 105 departmental mediators intervene when credit is refused, but also when companies have their existing credit terminated or their requests for debt rescheduling refused.
In 2020, the credit mediation service assisted 14,147 companies, most of which had contacted the service because they had been refused a state-guaranteed loan. The number of cases handled was 14 times higher than in 2019, and the 2nd quarter of 2020 alone accounted for 58% of the year's referrals.
2021 doesn't look much calmer: in Q1, the credit mediation service handled over 1,600 cases, almost twice as many as in Q1 2020, when the country had already experienced its first 2 weeks of confinement. However, the number of cases handled has fallen by a third compared with Q4 2020.