The government recently announced the extension of the state-guaranteed loan scheme (PGE) until December. Companies will be able to use these loans to repay debts they have contracted with their suppliers.
PGE scheme to run until December 31, 2021
On April 22, Bruno Le Maire, French Minister of the Economy and Finance, announced the extension of the PGE scheme until the end of 2021, whereas it was due to expire next June. The main aim of this measure is to avoid a wave of bankruptcies, as the aid offered to businesses will gradually come to an end. " We don't want a period of protection to be followed by a sudden thaw, resulting in tens of thousands of bankruptcies," says Bruno Le Maire.
In addition to this extension, the government has announced that the scheme will be extended. From now on, PGEs will be able to help companies settle their operating debts, and not just meet their cash flow requirements.
While the banks have been persuaded, they are nonetheless seeing a slowdown in corporate requests for EMP compared with the rate recorded in 2020.
Nearly 700,000 companies benefit
Introduced from March 2020, EMPs provide cash flow support for all companies, whatever their size or sector of activity. This type of loan can represent up to three months' sales. In most cases, the guarantee amounts to 70% of the loan.
One year after its introduction, the scheme has proved its worth: more than 675,000 companies have been able to benefit from it for a total of almost 137 billion euros, according to a press release from the French Banking Federation (FBF) on April 22, 2021. This success has also been reflected in the activity of the Credit Mediator, who reports having increased from 1,000 cases handled at national level in 2019, to 14,000 in 2020. According to Frédéric Visnovsky, National Credit Mediator, the majority of cases handled concerned refusals of EMP.
As shown by the PGE score board regularly updated on the Ministry's website, the scheme has largely benefited SMEs and VSEs in the retail, construction and catering sectors.
Companies that have taken out a state-guaranteed loan are now obliged to choose their repayment method and any loan amortization terms before the anniversary date of the contract.
Here are the options available to subscribers:
- a full refund,
- partial reimbursement,
- amortization,
- deferral for one year, then amortization.
In concrete terms, the companies concerned receive an information letter from the bank, around 4 to 5 months before the due date, detailing the repayment options available. These choices are confirmed by the signature of an amendment to the loan contract.