State-guaranteed loans in France: the moment of truth is approaching for companies

State-guaranteed loans in France: the moment of truth is approaching for companies

PARIS: No further postponement is possible, now companies must start paying off state-guaranteed loans (PGE) contracted during the health crisis, and if most of them manage to meet deadlines, the situation is critical for some, as they are forced to seek clemency from their banks .

“How can I pay off my PGE that is 15% of my sales while still making 20% ​​lower turnover than it was before the crisis? It’s not possible.” Patrick Belletti, Head of Foundry Sifa Technologies, sums up the dilemma he is currently facing.

The company, already weakened by the diesel crisis at the end of 2010, subscribed to PGE in mid-2020. The entrepreneur negotiated a delay until November 2022 to pay his first compensation. and after? “I don’t know if I will be able to pay because I don’t know what my level of application will be in the fall,” he says.

According to the Banque de France, of the nearly 700,000 companies that have subscribed to PGE with more than 148 billion euros in total, the default rate can hardly reach 3%.

“In general, many companies have a fairly strong ability to adapt,” confirms Virginie Normand, director of specialized markets at Banque Populaire at BPCE, which “epsilonesque” governs the level of non-payment at this point on the approximately 230,000 PGE awarded by the group .

“With a few exceptions, the companies have started to pay as planned,” we stress in Percy, where the crisis-exit commission set up in mid-2021 is being piloted.

‘No room for further maneuver’

But these somewhat reassuring statistics should not hide the real difficulties of some companies.

As for the tour group Pierre et Vacances, it was forced into a backup plan which saw PGE turn over €200 million in capital, bringing creditors into ownership of the group.

In the hotel and restaurant industry, where many companies have acquired PGEs, one in four companies at the end of June said they were unable to meet their payments, in a context where inflation is curbing consumer spending.

The situation is also tense in tourism where “many companies, badly affected by the pandemic, have asked for the maximum allowable PGE, that is (an amount corresponding to) 25% of the turnover. It is really complicated to pay it off over four years”, worries Yvonne Beltanche. A representative of the professional association of travel companies.

He himself has directed several PGEs for his network of travel agencies. He has no difficulty paying in the short term but “has no room to maneuver” if the activity falters, as he already fears the expected disruptions to air transport this summer.

In the field of textiles, FNH Treasurer Stephane Rodier explained to AFP that he “has not had very happy reactions from the accounting firms, since PGEs will now be compensated not more than 6 years but more than 4 years (due to the delay). for two years over the first deadlines), with occasional less activity.”


Companies facing difficulty can request the restructuring of the PGE through credit intermediation, via a specific mechanism negotiated between the state and banks, which allows in particular to extend the repayment period up to 10 years.

At the moment, only 300 cases have been handled through credit intermediation, a “very low” number, which is an indication that the financial position of the companies remains positive, according to broker Frederic Wisnovsky.

However, many companies are unaware of the existence of this amazing 10-year mechanism, and many others are avoiding it because it lowers their ratings and complicates their financing.

“I started getting worried at the beginning of 2022 because the cash flow was rising very slowly. I said to myself: ‘I’m going to go negotiate with the bankers’. They said ‘okay’, but I know it will be difficult for you to finance yourself for 3 to 5 years+,” he says. Jean Valfort, President of the Panorama Group, which owns five restaurants and brands of virtual kitchens, who contracted with PGE for a value of 1.5 million euros.

“When you default, the credit insurers pull out, which means you have to pay your suppliers right away, and that only makes the situation worse,” also advances François Asselin, president of CPME, who believes companies will tend to “prefer collective debt-freezing measures.” (Protection plan, guarding, liquidation, etc.)

“We are aware of this difficulty, but the PGE is a bank loan, so the banks apply the rules,” established at the European level, Najib Bercy.

If there is no fire today, the deteriorating economic prospects for the coming months are worrying. “We’re starting to see signs of wear in the order books” of businesses, warns François Asselin, and “if the business collapses, it could be complicated.”

The Bank of France, on which the credit brokerage depends, could soon revise its forecast for the number of companies unable to repay the PGE, admits Frédéric Wisnovsky.

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