2024-01-07 16:13:57
Published on Jan 7, 2024 at 4:35 p.m.Updated Jan 7, 2024 at 5:13 p.m.
Bad signal about the health of SMEs. While the default figures turn red, Bruno Le Maire announced on Sunday the extension, for three years, until 2026, of the agreement on the restructuring of loans guaranteed by the State (PGE) signed between Bercy , the Banque de France and the French Banking Federation.
This simplified procedure, conducted under the aegis of Credit Mediation (Banque de France), allows small and medium-sized businesses to postpone the repayment date of their guaranteed loans in a “rapid, free, confidential” manner, and above all, “ amicably”, in a non-judicial framework. Established in 2022, it had already been extended for the first time to 2023, but for only one year.
“Some companies may individually encounter difficulties repaying their bank loans, including their PGE,” explains Bercy.
If the extension of the agreement, this time, is much longer, it is because it aims to “go until the end of the timetable for the majority of the EMPs granted”, explains the ministry.
Bruno Le Maire’s office, however, refutes any alarmism. “The majority of companies faced the repayment of their PGE in 2022 and 2023 without difficulty,” he specifies. More than 50 billion euros of credits have been fully repaid out of the 107 billion granted to VSEs and SMEs since 2020 and the Covid crisis.
Increase in failures
On the side of large companies, in fact, they have also essentially anticipated. In December 2021, Lagardère had repaid 465 million euros of PGE. The rescue of Air France turned into a jackpot for the French state. The airline repaid the entire 4 billion euros of its guaranteed loans in March, two years early. In passing, it paid 650 million euros to the French State under its guarantee.
Bruno Le Maire’s announcement comes just two days after the Banque de France reported a surge in corporate defaults in 2023 (+34%). And a further increase is expected for 2024. Enough to raise fears that the State will have to further activate its guarantee to compensate banks in the event of default by SMEs. Until then, the public authorities have rather succeeded in controlling the bill.
Resorting to this amicable procedure is therefore an assurance for the State, businesses and banks to protect themselves against the rapid prospect of default.
No debt forgiveness
To date, a small number of PGE borrowers, i.e. some 560 companies (out of more than 685,800 beneficiaries) have benefited from this system. These SMEs were able to postpone their repayment deadline by two to four more years, in parallel with the reorganization of other bank financing.
On the other hand, they cannot benefit from the umbrella measure to obtain abandonment. And even less to trigger a conversion of their PGE into capital, which would make the State their quasi-shareholder.
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