Financing and Loans

Obtaining financing to meet your cash flow needs

This content is a translation of the document ‘Mesures de soutien économiques’ (Economic support measures) drafted by the government

The Government has implemented an unprecedented scheme to deal with the economic consequences caused by the Covid-19 crisis. It aims to provide companies the financing they need to cope with the drop in activity. State guaranteed loans, distributed by all banks and backed by a €300 billion State guarantee, are the central link in this scheme. The government has created and strengthened specific support tools to supplement these schemes and to support companies that would not be eligible for State guaranteed loans (because it would require major restructuring) as far as possible.

Obtaining financing to cope with the crisis: which path to take?

• Banks are the first point of contact for all companies. They can examine whether to apply for a State guaranteed loan and all appropriate financing solutions.

Each company can contact its usual bank advisor to obtain a State guaranteed loan. Banks undertake to provide a response on a case-by-case basis, within a short time frame.

• Companies struggling to obtain bank financing via the State guaranteed loan can subsequently refer their case to credit mediation. They can apply for mediation directly on the mediateur-credit.banque-france.fr website. The mediator re-examines certain applications with banking institutions in the event of difficulties and establishes the terms of an agreement.
• When discussion with the banks and mediation do not lead to a financing solution, businesses, banks or the credit mediator can call on the departmental committees for the examination of business financing problems (comités départementaux d’examen des problèmes de financement des entreprises, CODEFI), and in particular these committees’ Commissioners for Restructuring and Prevention of Difficulties (Commissaires aux Restructuration et à la Prévention des difficultés CRP). The CODEFIs can restructure the company’s liabilities and propose new financing, in particular Economic and Social Development Fund (fonds de développement économique et social, FDES) loans, repayable advances (avances remboursables), and participation loans (prêts participatifs).

 What funding schemes are available?

 The State guaranteed loan is a scheme available to all companies, with the exception of companies that have entered into insolvency proceedings before 31 December 2019. It can amount to up to 25% of 2019 turnover or two years of total payroll. See the dedicated product sheet.

 The Economic and Social Development Fund (fonds de développement économique et social, FDES) is a €1 billion support scheme granted by the CODEFIs. It provides support to struggling companies undergoing financial and operational restructuring, alongside private financial backers. This is mainly for companies with more than 250 employees.

Subsidised loans (prêts bonifiés) and repayable advances (avances remboursables) are part of a new discretionary support scheme aimed at small and medium-sized companies, as well as mid-sized companies. The scheme is endowed with €500 million. The CODEFIs make the decision on whether to grant them. It is intended to supplement the mass schemes when these do not suffice to turn the company around. Eligibility for the scheme is subject to certain conditions. Strategic companies with 50 to 250 employees are the preferred target of this discretionary scheme.

The objective is to support companies with real potential for recovery, taking into account their economic and industrial positioning, in particular their recognised know-how that should be preserved, their critical position in a value chain and their importance in terms of local employment.

Companies across all of France are invited to submit their applications to their CODEFIs. For help completing these steps, they can rely on the support of the network of CRPs led by the Directorate-General for Enterprise, which can assist them in managing this exceptional situation. See the dedicated product sheet.

 Exceptional small business loans (prêts exceptionnels petites entreprises) are a support scheme for very small and small businesses (fewer than 50 employees) having difficulty obtaining a State guaranteed loan. These loans supplement the existing schemes to help them to both rebuild their cash cushion and improve their balance sheet structure. This type of loan has a term of 7 years, with a total grace period of 12 months from disbursement.

It has a rate of 3.5%. The companies concerned must contact their département’s CODEFI. After the CODEFI examines the application and makes a pre-decision, the company will be able to finalise its simplified participation loan application on an online platform. See the dedicated product sheet.