The State has set up a cash loan dedicated to companies suffering from the pandemic. - IStock / City Presse

In this period of economic crisis, the state is trying at all costs to save as many businesses as possible from bankruptcy. Among a range of support measures, a loan guaranteed by the public authorities has in particular been put in place to enable companies to compensate for the lack of financial income due to health confinement.

The main interested parties jumped at the opportunity. Between the launch of this device and the end of April, more than 50 billion euros in loans guaranteed by the state (or PGE) had already been granted to more than 322,000 companies.

Easier financing

This measure consists of a one-year cash loan that can reach up to 25% of turnover excluding taxes, or two years of payroll for innovative start-ups, all accompanied by a deferred amortization over the same period. At the end of this first year, it may be granted for up to five additional years.

While banks would normally refuse to financially support professionals in difficulty for fear that they could not then reimburse, it is the State which assumes this risk taking by providing a guarantee which covers 90% of the amount granted to companies employing less than 5,000 employees or having a turnover of less than 1.5 billion euros in France. Beyond these thresholds, the guarantee varies between 70 and 80%.

An interest rate close to zero

This system was developed in consultation with the French Banking Federation (FBF), since it is the traditional banks which are responsible for granting it. They therefore undertook to distribute the EMP as widely as possible and in the most simplified way possible.

Firstly, although its interest rate is not regulated by law, this loan is offered at “cost price”, at a rate varying between 0.25 and 0.50%. In addition, no guarantee or security can be imposed on the property of the entrepreneur. As for the response time, it must be five days from receipt of the loan application file, as soon as the professional's turnover is less than 10 million euros.

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  • Coronavirus
  • Covid 19
  • Crisis
  • Loan
  • Bank
  • Economy
  • Trade