How firms can get state-guaranteed Covid loans in France

If your business is short of money following the coronavirus pandemic, you have until the end of the year to apply for a state-guaranteed loan.

2 October 2020
By Connexion journalist

The prêt garanti par l’État (PGE) is a loan scheme that is available to all businesses affected by Covid-19, regardless of their size or legal structure. This includes freelancers, artisans, small businesses, farmers, etc. 

The PGEs are available until December 31 2020. 

The state guarantees 70% of the loan amount for bigger companies or up to 90% of the loan for smaller companies. 

This loan can be worth the equivalent of three-months' of turnover (calculated from last year). 

For new companies or start-ups, the amount of the loan can be worth up to the equivalent of two years' of payroll.

It is possible to apply for several loans at the same time, but the cumulative amount of these loans must not exceed 25% of your company’s turnover or two years' of payroll for a new company.

There are different steps to obtain the loan depending on the size of your company. 

If your business employers fewer than 5,000 people and the turnover is less than €1.5 billion:

  1. Set up a meeting with your bank to ask for the loan.
  2. The bank will examine the demand and then (if the business meets the criteria) pre-approval will be given. 
  3. Sign in to the BPIFrance website to obtain a unique ID number, that you should then send to your bank. To do this, you will need to provide your unique French business identification number (SIREN), the amount of the loan as pre-agreed with your bank, and the name of your bank.
  4. Once the unique number is confirmed, your bank will grant the loan. 

If your company employs more than 5,000 people and the turnover is over €1.5 billion:

  1. You should approach your banking partners to apply for a loan and obtain their pre-approval.
  2. Send your request to: garantie.etat.grandesentreprises@bpifrance.fr
  3. The file is processed and then will be granted by individual order of the minister of economy and finance
  4. Your bank will then grant the loan

Reimbursement 

The cost of the loan is calculated on a case-by-case basis and ranges from 0.25% to 0.5% of the total loan amount. No loan repayment will be required in the first year.

The loan can be repaid over a maximum of five years. 

Refusal rate

It is worth noting that the loan request can be refused by your bank if your company’s finances are too unsure.

However to date there is a very low rate of refusal rate of around 3% of requests. 

Small and medium-sized businesses and very small businesses (Très Petites Entreprises or TPEs) make up around 94% of the loan schemes beneficiaries.

Read more: 

New French state help for struggling small businesses

Do French entrepreneurs need separate work bank accounts?

France boosts eco renovation: How to benefit

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