Entrepreneur PGE: the mechanism extended until June 30, 2021

PGE: the mechanism extended until June 30, 2021

The worsening of the health crisis is pushing the government to adapt its strategy in terms of support for businesses. After the shock announcement Wednesday by the President of the Republic of the establishment of curfews nocturnal in Ile-de-France and in eight metropolises, the Minister of Economy and Finance indicated Thursday, October 15 that he would extend the system of loans guaranteed by the State (PGE) by six months. Companies will therefore be able to apply for this type of loan until June 30, 2021, instead of December 31, 2020 until then.

“The curfew measures will have a direct impact on tens of thousands of businesses […]. The state has responded present since the start of the crisis, and the state will respond as long as the crisis lasts […]. In all the areas concerned, we are therefore adapting our system ”, said Bruno Le Maire. The extension of the device will nevertheless concern all companies, in all sectors and in all regions., not just those under curfew.

Distributed since the end of March by banks, the EMPs allow companies to obtain a loan that can represent up to 25% of their turnover, and 90% of the amount is guaranteed by the State – the rest being borne by the lending institution. These credits are mainly intended for SMEs and very small businesses.

The “season” EMP, launched this summer, intended to support the tourism sector in particular, enables amounts equivalent to the best three months of turnover to be obtained. It remains relevant, even if it is relatively little distributed.

An extension validated by Brussels

Overall, EMPs have been very successful since their inception. To date, nearly 590,000 companies have benefited, according to data published by Bercy, for an amount of 122 billion euros. The state had indicated at the beginning of the crisis that it was ready to guarantee up to 300 billion euros in loans to help companies weakened by the crisis.

The government’s announcement comes two days after that of the European Commission, which decided to extend the mechanism which exceptionally allows member states to support companies financially. The rules on state aid in the Union will remain in brackets until at least June 30, 2021, compared to December 31 initially.

Carry-over of reimbursements on a case-by-case basis

In addition to the extension of the device, Bercy also asked the French Banking Federation “To examine the deferral of repayment of these loans for an additional year for companies that need it ”. Minister Bruno Le Maire raised the subject this Thursday, October 15 with the president of the FBF, Philippe Brassac.

The repayment of an EMP normally begins one year after signing a loan, and can be spread over five years, with rates varying between 1 and 2.5%, depending on the duration chosen. Banks claim to grant these loans at cost.

But for some companies, the second wave of the epidemic and the deterioration of the economy that could result from it will complicate their ability to repay their loans. This was also one of the fears of CPME, the Confederation of SMEs, which called on Thursday morning to “Institute a new scenario for exiting the EMP by pushing back the repayment deadlines from one to two years”.

Banks, which share the idea, like the government, that flexibility must be the rule, have taken note of the request to propose solutions for this first year, intended for companies particularly affected in sectors affected by activity restrictions. », Reacted the FBF. The criteria specifying the “Companies in difficulty” who could benefit from it remain to be defined, and will be the subject of discussions between Bercy, the banks and the professional federations. The hotel and catering sector should logically be one of the main beneficiaries of these postponements.

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