The French Minister of the Economy and Finance has announced possible adjustments to the repayment of PGEs. Certain companies will be able to spread repayment of their state-guaranteed loan over 10 years.
Renewal of place agreement
The market agreement of January 19, 2022 created a simplified procedure dedicated to very small businesses, enabling them to reschedule their state-guaranteed loan in the event of proven difficulty. This free, confidential and non-judicial procedure is supervised by the Banque de France's Médiation du Crédit aux Entreprises. It has enabled 30 billion of the 106 billion loans granted since 2020 to be repaid. More specifically, 206 companies were able to take advantage of the scheme in 2022 to spread their debt over an additional 2 to 4 years compared with the initial repayment period.
In view of the economic context for 2023, marked by the consequences of the energy crisis likely to lead to cash flow difficulties for companies, the agreement has been renewed for 2023.
Repayments spread over 10 years
Companies that have borrowed up to 50,000 euros from PGE and are experiencing repayment difficulties can now contact Médiation du crédit to arrange repayment of their loan. After examining the case, the Banque de France-backed body will determine whether repayments can be spread over time without increasing the cost of the guarantee.
For companies that have borrowed more than 50,000 euros in EMP, a reorganization is also possible. In June 2022, Bercy set up departmental crisis exit committees to deal with these cases, before redirecting them if necessary to the Credit Mediation Service.
Few companies concerned
The government estimates that over 95% of companies will be able to repay their EMP on time, and that the default rate is very low. The renewal of the agreement is designed to support all companies, especially those whose business has been affected by the health restrictions applied in the wake of the Covid-19 crisis.
While only 5% of companies could be experiencing difficulties in repaying their monthly instalments, to date only 600 restructuring files have been examined by the Credit Mediation Service, i.e. less than 0.1% of the total number of EMPs granted since 2020. Bercy justifies this low take-up by a lack of awareness of the scheme. It has to be said that eligible companies are understandably reticent, as the process can lead to default on payment. Added to this is the difficulty of taking out other bank loans. However, the situation could change in 2023 as a result of soaring energy prices.
To date, almost a third of the total of 143 billion euros has already been reimbursed. The first repayments began in 2022.