The repayment of the State Guaranteed Loan (PGE) facilitated!

Good news: the Economy and Finance Minister, Mr. Bruno Le Maire, announced that companies that would be in difficulty to repay their State Guaranteed Loan (PGE – prêt garanti par l’Etat) will have the possibility to postpone by 6 months the repayment of the first maturity and to spread the next repayments over a period that can go up to 10 years.

Example: A company that subscribed to a PGE in March 2020, at the very beginning of the health crisis, and requested a one-year repayment deferral should have started repaying in March 2022. Now, it can postpone the first repayment until the end of 2022. It may also request the staggering of the repayments until March 2030 and no longer until March 2026.

More specifically, according to the minister, this measure applies to companies “which see the spring deadline coming by telling themselves that they will not be able to repay.” 25,000 to 30,000 businesses, mostly, traders, craftsmen, and restaurant owners, would be in this situation.

Seeking the help of the credit mediator

In practice, in order to benefit from the measure of deferral and staggering of repayments, these companies are invited to contact the credit ombudsman (an institution under the Banque de France and responsible for unlocking the dialogue between a company and its bank in the event of difficulty in obtaining credit). The mediator examines the files on a case-by-case basis. It is up to him to give or not the green light.

Reminder: The PGE is open to all companies, regardless of their size and sector of activity (except for certain real estate companies, credit institutions and financing companies), as well as to non-profit organizations. The amount of the loan is capped at 3 months of turnover, or 2 years of payroll for new or innovative companies. Unless the new deferral and staggering measures apply, the repayment is deferred for one year, or even 2 years if the company so wishes, and it can be staggered over a period ranging from 1 to 5 years. The maximum duration of a PGE is therefore 6 years. Its rate is between 1% and 2.5% depending on the duration of the loan. As its designation suggests, the loan is guaranteed by the State up to 70% to 90% of its amount, depending on the case. Around 697,000 companies have contracted a PGE since March 2020, for a total outstanding amount of 143 billion euros. According to the French Banking Federation (FBF), the situation is “reassuring for most of the companies that have subscribed to it: half have already started to repay since the summer of 2021, without difficulty”.