Posted on Dec. 2020 at 11:02
In finance, it is the star product of the year. But the banks would surely have done well. Loans guaranteed by the State were granted en masse in 2020. According to the latest statement made by Bercy, in mid-December, the amounts of loans distributed amounted to approximately 129 billion euros.
In total, 630,000 companies have benefited, 89% of which are very small companies with a turnover of less than 2 million euros. A crazy success therefore, which strongly mobilized the bankers, and which is unfortunately explained by the violence of the crisis and the abrupt end of activity for many companies from March.
The device had been designed, during the first days of containment, by the Ministry of the Economy and Finance, banks and Bpifrance. Objective: to provide businesses with liquidity very quickly and at attractive rates, within the limit of 25% of annual turnover, with an amount guaranteed at 90% by the State. And leave the possibility to companies not to repay the capital the first year, then to spread the maturities over five years maximum.
Most of the funds were distributed in the first half of the year: between March and June, 105 billion euros in loans were granted by the banks. The second confinement started at the end of October did not have the same impact as the first on the activity of companies. “The number of requests for new EMPs during this period was expected to be higher”, recognizes Christine Fabresse, director of retail banking and insurance at BPCE, which has granted a total of more than 30 billion euros in loans, but where the number of requests has been almost divided by ten compared to the spring.
Among the sectors that have benefited the most from EMPs are logically small businesses, hotels and restaurants and construction. Variations of the guaranteed loan system were also set up during the year to deal with the difficulties specific to certain activities.
This is the case, for example, of the “PGE season”, launched this summer, and which allows companies whose income depends heavily on tourism to borrow the equivalent of their three best months. This is also the case for the “PGE Aero”, dedicated to aeronautical professionals, and whose first funds were distributed this week.
Caution of business leaders
Despite the success of the device, the borrowed money was not necessarily spent. “Business leaders have played it safe with the PGE”, indicates Christine Fabresse, who specifies that 60% of the amounts granted by the BPCE group were still in customer accounts at the beginning of December.
This is confirmed by the Banque de France in its latest bulletin, published a few days ago. “Companies have adopted hoarding behavior since the onset of the crisis, with gross debt and deposits from non-financial corporations developing very similarly [depuis le début de la crise]. “ For some, especially in catering, this money was however essential.
This is the case of the restaurant chain Ninkasi, which has several establishments in the Lyon region, and which was able to benefit from a loan of 3 million euros, paid in three installments between March and October. “Each time, we were able to demonstrate to the bank that the funds were strictly compensating for the losses generated by the crisis”, remembers his boss Christophe Fargier.
The mass of money released must nevertheless be reimbursed. At the end of 2020, bankers have started to contact their clients to define the schedule of repayment deadlines, which may begin in April for the former, and therefore the interest rate that will be applied (between 1 and 2.5% depending on the duration of the amortization).
Possible deferral of reimbursements
On this occasion, borrowers will be able to negotiate with their bank the possibility of postponing the first repayments by an additional year, as Bercy wished, when the second confinement began. Certain establishments have clearly communicated on this possibility, such as CIC (a subsidiary of Crédit Mutuel Alliance Fédérale) and BPCE.
“We will offer it to all our customers, without exception, to offer them maximum flexibility, whatever their situation and their needs”, comments Christine Fabresse. Other banks are becoming more discreet.
But, for all, the EMP will be a major subject for 2021. The weight of these loans on the balance sheet of banking institutions is not negligible. The European authorities have been worried for several weeks about the ability of these large numbers of borrowers to be able to honor their first repayments and are waving the risk of a surge in bad debts, even if the banks only bear 10% of the risk.
For the moment, French banks are showing their optimism, recalling that they have put billions of euros aside this year to deal with the crisis. “In any case, it remains difficult to make projections on the repayment capacity of EMPs. We will also have to see how the end of the year went ”, indicates a banker.