Companies: solutions to overcome the repayment of state-guaranteed loans

While the amortization of State Guaranteed Loans (PGE) took place in an environment of uncertainty to which geopolitical conflict was added, the government and institutions put in place financial instruments to support the cash flow of companies.

Granted to around 700,000 companies between 2020 and 2021 to face the effects of the health crisis, that is, around 145 billion euros, State-guaranteed loans (PGE) allowed them to take on debts over six years without difficulty – with a 90% state guarantee and a limit of 25% of its turnover. More than 53% of PGEs were requested by companies in the commerce, construction and tourism sectors that drain the economy of Occitania.

€425,000 on average

For 50% of regional companies, the requested PGEs represent on average between 16 and 17% of turnover. SMEs requested an average of €425,000, while VSEs requested €52,000. These loans allowed them to relaunch their activitynotes Gabriel Urena, corporate market manager at Banque Populaire du Sud (headquartered in Perpignan). In Occitania, Banque Populaire du Sud financed €967 million, i.e. 10,000 PGEs requested by companies, including 8,500 in 2020 (1600 in 2021 and 172 since early 2022, Ed).

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Recovery and resilience plans

In order to support the recovery plan and deal with the impact of the Russian-Ukrainian conflict, the EMP is extended in new ways.. This funding tool is thus framed in the support plan for the tourism sector with the PGE Saison, whose conditions are more favorable than those of the classic PGE, as it is based on the three best months of 2019, an advantage for seasonal activities . Some tourism players, such as Stéphane Rives de Aude, at the head of four hotel establishments in Aude and Gard, have chosen to benefit from it.

In parallel, the The economic resilience plan provides that from July 1 to December 31, 2022, companies can benefit from a new state-backed loan called PGE Resilience. It allows a company to borrow up to 15% of its average annual turnover, calculated over the last three years. Can be combined with a classic PGE.

Few companies in Occitania are directly impacted by the war in Ukraine, but all suffer the consequences of the conflict.

Few companies in Occitania are directly impacted by the war in Ukraine, but all suffer the consequences of the conflict in their operating cycle – rising prices for energy, transport, materials or customer solvency – with an impact on PGE reimbursement.comments Gabriel Urena. The assignment of this Resilience PGE will take place from 1er May. We have about fifteen orders”.

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Arrangements and a variety of financial tools

To date, around 20% of companies that have contracted a PGE have already fully reimbursed it and half of companies have started to reimburse it, according to the French Banking Federation (FBF). “The PGE non-refund rate anticipated by the Banque de France is 3.1%adds Gabriel Urena. EMP failures are estimated to be less than 300 in Occitania”.

For companies experiencing repayment difficulties, the government has granted a payment spread of up to 10 years (compared to 6 years normally) and the possibility to defer the first repayment by six months.

The possibility of using a second classic PGE

Despite these adjustments, the current context must lead companies to analyze their financial problems to find the appropriate solution so as not to disconnect from resources that run the risk of limiting their production capacitycomments Gabriel Urena. When redeeming PGEs obtained in 2020, they have the option of using a second classic PGE; make a contribution to a checking account, request a contribution from partners or third-party funders”.

According to the banker, the companies also have other lesser known financial products such as: “theThe Participatory Recovery Loan (PPR) which is also guaranteed by the State. With a rate of 4.1%, it allows financing of equity. Compared to PGE, the interest rate looks important. PPR will become interesting as interest rates will undeniably rise. This funding tool, however, remains below the remuneration requested by business angels (between 8 and 12%, editor’s note)”he adds.

Today, labor problems are yet another obstacle to sustainability

There is another financial instrument, more local, created by the Region of Occitania, the Banques Populaires and the Caisse d’Épargne: Foster Participatif Glance guaranteed by Europe that can finance the purchase of equipment, WCR… environmental process, also have access to the Impact Loan. Offers an interest rate bonus subject to meeting CSR criteria. Despite all the State’s support measures and the institutions’ financial instruments, companies can do nothing without their productive forces. Today, labor problems are more of an obstacle to sustainability and business development than the absence of financial solutions”concluded the banker.

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