While Emmanuel Macron speaks this Monday evening to announce a likely extension of the containment in France, companies are accusing the blow. The impact is very heavy for entire sections of the economy. To cope with the coronavirus crisis, many are therefore asking for state guaranteed loans. There are around 20,000 new requests every day, according to a banking official. Saturday evening, more than 200,000 requests had arrived in banking establishments, according to information from Europe 1.
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150,000 loans granted
"Currently, 150,000 loans guaranteed by the State have been granted for a total of 22 billion euros", specifies on Europe 1 Nicolas Dufourcq, managing director of BPI France, public investment bank. "And the 14,000 bank branches of the network in France are in the process of investigating for 40 billion euros of loan. All this is the materialization of the airlift of cash launched a month ago".
Currently, this state guaranteed loan scheme, also called PGE, has been calibrated for an amount equivalent to three months of turnover.
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The demand is greatest in the hotel and trade sectors. If the banking networks total 20,000 new requests each day, Nicolas Dufourcq estimates that the system will continue to grow. "Partial unemployment has already been requested by 700,000 companies. This gives an idea of the potential of the ELP," he said.
Few refusal criteria
For the structures best rated at the Banque de France, the granting of the loan is almost automatic. But in some cases, obtaining this loan can be problematic and require further study. "It's the obstacle course that begins," notes an employer source. "The banks are playing the game," reassures Nicolas Dufourcq. "There is a form of sacred union". If the loan refusal rate has not yet been taken into account, the Director General of the BPI ensures that normalization was underway within the banking agencies to favor this device "of general interest, low risk for the banks", he specifies.
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Loan rejection cases are mainly limited to companies already in difficulty before the health crisis: those in default of payment on December 31, 2019 for example. Another more technical reason that could motivate a refusal: companies considered "in difficulty" within the meaning of European regulations, that is to say those who have lost more than half of their equity in the last twelve months. Despite often positive operational results, the rule prohibits a guarantee on these companies. "We are working, and I think we can announce some good news this week," rejoices Nicolas Dufourcq.
A spread reimbursement
These cash advances, necessary for the survival of many businesses, will have to be repaid but within flexible deadlines. No reimbursement in the first year, and the possibility of amortizing over an additional five years, after one year. A long time to absorb the shock, specifies the director-general of the BPI.
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In the meantime, there are also testimonies from entrepreneurs who are refused loans without reason. "Some banks are still in the old culture: 'Do you really need it? Prove your self-financing ability? Give me a six-month cash plan?' The managing directors of the major banking networks have been extremely clear: we must stop. We must always remember that this is an epidemic crisis, not an economic one, that companies are not responsible for the imposed administrative closure, "says Nicolas Dufourcq." The State owes you something. "