ECONOMIC CRISIS: These equity loans, announced by Bruno Le Maire, are intended for companies which have “real potential for a rebound, but which were penalised by a loss-making operation during the year”
The Economy Minister Bruno Le Maire announced Monday that EUR 20 billion would be devoted to strengthening the equity capital of companies through equity loans distributed by banks that the state will bring its guarantee.
“We have, and I have personally heard the criticisms of a number of economists who said that these equity loans were insufficient, the replenishment of equity must be stronger. And so we have now set as ambition 20 billion euros of outstanding participatory loans for the reconstitution of the equity of companies ”, declared the Minister during a press conference. This objective must be reached by the end of 2022.
Loans available in early 2021
The 100 billion stimulus plan already provided for this device but the precise amount remained to be defined. The Finance bill for 2021 will be amended in this sense, added Bruno Le Maire. The President of the French Banking Federation, Philippe Brassac, specified that unlike the loan guaranteed by the State, which is aimed at companies that have “cash flow difficulties”, equity loans are intended for those who have “A real potential for a rebound, but which were penalised by a loss-making operation during the financial year” and which therefore need to “introduce capital”.
According to the roadmap presented on Monday, these equity loans must be available from the first quarter of 2021. In addition, in order to drain “Covid savings” from households, which currently stands at 87 billion euros, towards the financing of companies, it was also announced the establishment of a “Reliance” label for collective investment undertakings investing in French SMEs.
An initiative which should make it possible to “mobilize 10 to 20 billion euros” for the benefit of companies to help them overcome the crisis, according to the minister. The General Confederation of Small and Medium-Sized Enterprises (CGPME) hailed in a press release “concrete progress in favour of business financing”.
With regard to participatory loans, they must, however, “be simple and accessible, under penalty of missing their target”, their “repayments spread over a period of 10 years, and the system must not exclude viable companies before the crisis”, she warned.