The Conseil d'analyse économique (CAE) has studied the bank accounts of over 100,000 VSEs and SMEs, and analyzed their evolution between the start of the health crisis and August 2021. While the conclusions are reassuring, given that the financial situation of companies has improved, a non-negligible proportion of VSEs and SMEs may have difficulty repaying their state-guaranteed loans.
Companies: a much improved financial situation
The study by the Conseil d'analyse économique found a clear improvement in the financial situation of VSEs and SMEs, in terms of both cash flow and net bank loans.
Companies' cash flow situation has improved considerably, thanks in large part to state-guaranteed loans (PGE). This trend concerns all business sectors, including those most affected by the health crisis, such as the accommodation and catering sector. In the construction sector, the improvement in cash flow was less marked.
Another indicator of the financial situation of VSEs and SMEs is the net bank balance, which does not vary when a company obtains a loan and keeps it in its current account without using it, but deteriorates when it uses part of it.
Net outstanding bank balances for VSEs and SMEs also improved between February 2020 and August 2021, and particularly since the start of 2021. However, the CAE report on the financial situation of SMEs and VSEs in August 2021, based on their bank accounts, points to the gap between SMEs, whose net bank outstandings have seen more limited growth, and VSEs, who were the first to benefit from the solidarity fund before it was extended, which explains why they were also the first to see their financial situation improve.
Moreover, as the Conseil d'analyse économique points out, "the economic shock of Covid was more severe in Paris Region than in other regions", and the financial situation of Paris Region companies has evolved less favorably. The report suggests one explanation for this discrepancy, namely "the weight of foreign tourists in economic activity in Paris Region".
State-guaranteed loans
Of the 70,000 VSEs and 25,000 SMEs studied by the Conseil d'analyse économique, 35% obtained a government-backed loan. The majority of those who took out an EMP were already in difficulty before the crisis, and experienced the greatest deterioration in their financial situation during the health crisis.
On average, VSEs and SMEs that have benefited from an EMP have used 40-50% of the sum obtained.
"The EMP was therefore not simply deposited in a current account for security, but was partly used to cover expenses or losses," explains the report.
Companies did not use their EMPs continuously, but mainly during the hardest periods in terms of sales, such as the two months of the first containment in 2020.
The Conseil d'analyse économique is somewhat alarmed by the potential difficulties a number of VSEs and SMEs may face in repaying their PGEs.
"By August 2021, 15% to 25% of companies with an EMP would be unable to repay an annuity of 20% of their EMP. The question will be whether these companies will subsequently generate sufficient income to be able to pay the following annual instalments even as the aid runs out," it reads.
Moreover, the nature of corporate debt has changed since the start of the health crisis. Whereas debt used to be used primarily to finance investments, it is now used to maintain a certain level of cash flow. Cash flow debt now accounts for 52% of total SME debt, compared with 44% for VSEs.
The SMEs and VSEs likely to have difficulty repaying their guaranteed loans come from a wide range of sectors, from construction to information and communications, including manufacturing and accommodation and catering, particularly in the Paris region.