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Business Loans in France, All You Need To Know:
Compare the best business loans available online for free and in just 5 minutes. At FUNDGECKO we show you the small print of all the loans on the market, we explain what you should know before using them and how to get the best offer.
Also read: The Best Loans in France
[UPDATE] What economic measures have been implemented by the government for state-guaranteed loans to tackle COVID-19 effects
Changes in the government-guaranteed loans following the announcements made by the Minister of the Economy, Finance and Recovery on January 14, 2021, it was agreed with the French Banking Federation that all companies that so wish, regardless of their activity and size, would be entitled to obtain an additional one-year deferral to begin repaying their State-guaranteed loan (PGE).
A company that took out a PGE in April 2020, and which would not be able to start repaying it in April 2021, will thus be able to apply for a one-year deferral and start repaying it from April 2022. All companies are encouraged to speak to their bank advisor to decide on a repayment plan for their EMP.
The state-guaranteed loan
To deal with the economic shock linked to the coronavirus crisis, the Government has implemented an exceptional €300 billion guarantee scheme to support corporate bank financing.
It is open to all companies until June 30, 2021 throughout the territory, regardless of their size and legal form (SMEs, ETIs, farmers, craftsmen, merchants, liberal professions, innovative companies, micro-entrepreneurs, associations, foundations, etc.).
Certain SCIs, credit institutions and finance companies are excluded.
Companies can take out a State-guaranteed loan with their usual banking institution or, since May 6, 2020, with loan platforms having the status of intermediary in participatory financing.
Essentially in this case, the EMP is governed by the same rules as when it is taken out with a bank.
The amount of the loan can reach up to 3 months of 2019 revenues or 2 years of payroll for innovative companies or companies created since January 1, 2019.
No repayment is required in the 1st year.
2 to 4 months before the anniversary date of the EMP, the company director will make the decision on repayment.
He may decide to repay his loan immediately, to amortize it over 1 to 5 additional years, or to mix the 2.
As part of the in-depth and regular dialogue to which the banks invite their customers before they make this decision, the banks undertake to offer a personalized proposal for the amortization terms that best correspond to the customer’s situation and needs.
Thus, it will be possible to integrate a new one-year period into the amortization phase where only the interest and the cost of the State guarantee will be paid, staying within a total loan duration of 6 years (maximum duration wanted by the European Commission).
With regard to rates, small and medium-sized companies that wish to spread out the repayment of their EMPs will be able to benefit from bank rates of between 1% and 2.5% depending on the number of years of repayment.
Under current interest rate conditions, banks have agreed to offer a maximum rate of :
- 1 to 1.5% for loans repaid by 2022 or 2023
- 2 to 2.5% for loans repaid by 2024 to 2026, including the cost of the government guarantee.
The government guarantee covers a percentage of the amount of principal, interest, and fees remaining due on the debt until the maturity of its term, unless it is called beforehand in the event of a credit event.
This percentage is set at :
- 90% for companies which, during the last closed fiscal year, or if they have never closed a fiscal year, as of March 16, 2019, employ less than 5,000 employees in France and have revenues of less than €1.5 billion,
- 80% for other companies with revenues of more than €1.5 billion and less than €5 billion in the last financial year,
- 70% for other companies.
The banks have committed to massively distribute, at cost price, the loans guaranteed by the State to relieve without delay the cash flow of companies and professionals. They will examine all requests addressed to them and will provide them with a rapid response.
Nevertheless, all companies, especially the largest, which do not meet their obligations in terms of payment deadlines, will not have access to this State guarantee for their bank loans.
A large company applying for a state-guaranteed loan also commits to :
- not to pay dividends in 2020 to its shareholders in France or abroad
- not to proceed with share buybacks during the year 2020.
This commitment has been applicable since March 27.
How to benefit from a government-guaranteed cash loan?
For companies with less than 5000 employees and a turnover of less than €1.5 billion in France:
The company should approach a banking partner to apply for a loan
It is possible to apply for multiple loans. The cumulative amount of these loans must not exceed 25% of the turnover or 2 years of payroll for new or innovative companies.
After examining the company’s situation (eligibility criteria in particular), the bank gives a pre-approval for a loan.
The company should then visit attestation-pge.bpifrance.fr to obtain a unique identifier that it will use and communicate to the bank with.
For this purpose, the company provides its SIREN, the amount of the loan and the name of the bank agency.
During the first month of the system, the company will be able to obtain only one unique number, it thus requests it only after having obtained a pre agreement from the bank.
Upon confirmation of the unique number by Bpifrance, the bank grants the loan.
In case of difficulty or refusal, the company can contact Bpifrance at the following address: supportentreprise-attestation-pge[@]bpifrance.fr
For companies employing at least 5,000 employees or with a turnover of more than 1.5 billion € in France:
- The company should also approach its banking partners to apply for a loan, and obtain their pre-approval.
- The company will then transmit its request to the email address: garantie.Etat.grandesentreprises[@]bpifrance.fr
- The file is processed upon receipt for the State by the Treasury Department supported by Bpifrance Financement SA.
- The State guarantee is granted by individual order of the Minister of the Economy and Finance.
- The banks can then grant the loan to the company.
State-guaranteed loans granted through a crowdfunding/participatory financing platform are essentially governed by the same rules as a state-guaranteed loan from a bank.
In addition, the other measures put in place by Bpifrance remain: guarantee to SMEs and ETIs on a confirmed overdraft over 12 to 18 months or on a 3 to 7 year loan.
To benefit from Bpifrance’s measures, fill out the online form or call Bpifrance’s “coronavirus” toll-free number at 09 69 37 02 40.
The crowdfund loan is a new method of financing a company without a bank intermediary.
Regulated in France since 2014, this practice, also called “crowdlending”, allows individuals to invest online in a company through participative financing platforms to take advantage of advantageous rates and achieve savings.
Companies looking for financing adapted to their needs can now find the best rate for business loans online thanks to the comparator LeLynx.fr
The advantages of crowdfunded loans
Many SMEs face serious obstacles in financing their growth.
Banks and financial institutions are generally reluctant to provide loans to start-ups and young companies, which are key drivers of growth and job creation.
This is why the participatory solution is proving to be a real help to business financing.
The benefits of such platforms remain very attractive.
The entire process is carried out entirely online and you can have quick access to financing in less than 2 weeks. This makes things significantly easier for entrepreneurs.
Companies often have very specific financing needs that banks refuse to support, such as recruitment, cash flow, marketing expenses and business development.
It is quite the opposite for the participative financing sites, which support all projects that are sufficiently attractive according to adapted loan rates.
Crowdlending is advantageous for both borrowers and investors.
On the one hand, savers/investors can finally invest in an innovative and meaningful business while significantly increasing their savings (the loan interest rate is around 7%).
On the other hand, companies benefit from a tailor-made loan: easily and quickly.
Any company older than 2 years can apply for a loan on a participative financing site.
Each platform usually tend to apply internal verification and rating rules to ensure the creditworthiness of the borrowing company before the project is published on the site so that investors can invest their funds with peace of mind.
Once published, the project that is deemed sound is open to individual investor financing.
Crowdfunded loans can therefore be a possible way to help entrepreneurs finance their business projects.
Other funding mechanisms
Companies that have been unable to obtain a state-guaranteed loan from their bank can contact their departmental credit ombudsman. If the mediation fails, they can refer the matter to the departmental committees for the examination of business financing problems (CODEFI) to apply for other financing arrangements.
The Economic and Social Development Fund (FDES)
The FDES is an intervention mechanism activated by the CODEFIs and endowed with €1 billion to support the financial and operational restructuring of companies in difficulty alongside private financiers, mainly for companies with more than 250 employees.
Subsidized loans and repayable advances
Subsidized loans and repayable advances are a new discretionary intervention mechanism for small and medium-sized enterprises and mid-sized businesses.
It is activated at the initiative of CODEFI. It is intended to be used when recourse to the EMP is not possible and the tax and social security debt write-off plans are insufficient to enable a turnaround to take place.
Equity loans are intended for very small companies (less than 50 employees) having difficulty obtaining a guaranteed loan, to enable them to both rebuild their cash flow and improve their balance sheet structure (“junior” loans, to be repaid in 7 years).
Since October 14, a secure digital platform has been available to help business leaders guided by the Credit Mediation and CODEFI to more easily submit their loan applications.
In addition to government-guaranteed loans, the aim of this system is to enable companies to benefit from factoring financing as soon as orders are taken, without waiting for delivery and the corresponding invoices to be issued.
This new financing will be eligible for the State guarantee.
This guaranteed pre-financing will enable companies to gain an average of 45 days of cash flow compared to traditional factoring.
This financing will enable the financing of working capital requirements related to the business recovery and thus enable the Group to meet the greatest number of new orders. This short-term pre-financing will also make it possible to relax payment terms within value chains, particularly in industry, construction and building.
This support mechanism, which is unprecedented in France and abroad, has been developed in conjunction with factoring companies and the French Association of Financial Companies (Association Française des Sociétés Financières).
It will be applicable to the financing of orders taken until December 31, 2020.
Interested companies should contact factoring companies to examine the possibilities of setting up this pre-financing, which is subject to certain conditions.
About this page, our methodology
What this page is for: our goal is to help you get the best financing for your needs. Therefore, here we explain you what credits with personal guarantee are, how you can compare them to know which one suits you and which offers are the most attractive right now.
Source: the information regarding the main characteristics of personal loans and their current regulation comes from recent law on consumer credit contracts among other reference portals.
Methodology: the data relating to the conditions of these products (amount, term, interest, etc.) have been obtained through online research and consultation of the official statistics of the aforementioned reference sources.
About FUNDGECKO: we are an online comparator specialized in personal finance and home economics products. Here you can, in addition to comparing the conditions of all offers, find quality information that will help you identify the personal loans that best suit your needs.
Note: the services we offer are totally free for the user, as FUNDGECKO obtains its income from advertising and its featured products.