Extension of the deadline for signing a resilience PGE by the amended finance law of August 16, 2022 for 2022

1. As part of the resilience plan presented on March 16, 2022 by the Prime Minister, the government announced the creation of a new state-guaranteed loan (PGE). The “PGE resilience”, as it is called, aims to support companies with a significant need for liquidity due to the direct or indirect economic consequences of the conflict in Ukraine: an increase in the price of some raw materials (energy, cereals, metals, etc.). ), disruptions in supply chains, suspension of payments from Russia or Ukraine, loss of business opportunities due to international sanctions, etc.

2. More legally, this PGE resilience was established by the decree of April 7, 20221 amending the decree of 23 March 2020 granting the State guarantee to credit institutions and financial companies2, on the same legal basis as the guarantee authorization for “classic” PGEs distributed during the health emergency. However, this EMP resilience is not well known.

3. We therefore present its content (I) before questioning its impact on the absence of the right to credit (II).

I – Presentation of the EMP resilience

4. Here we will say a word about the companies eligible for PGE resilience (A), the loan amount (B), the State guarantee (C), the remuneration of the guarantee (D), the repayment form (E), and finally the duration of the device (F). This last point has, however, undergone a notable evolution from art. 23 of Legislative Decree law n ° 2022-1157 of 16 August 2022 of the amending finances for 2022.

A – Eligible Companies

5. Pursuant to article 6, I, of law n ° 2020-289 of 23 March 2020 of the amending finances for 20203amended several times, “the State guarantee can be granted for loans granted by credit institutions and financial companies or by credit institutions pursuant to art.article L. 548-1 of the monetary and financial code (…) to companies registered in France other than credit institutions or financial companies (…) “.

6. It should be noted that the distribution of PGE resilience does not provide for an eligibility criterion based on the legal form of the company (excluding credit institutions and financial companies), on its size or on its sector of activity. Therefore, each request must be examined on a case-by-case basis by the banker based on the financial situation of the firm and its financing needs.

7. Article 5, I, definitely, of the decree of 23 March 2020 granting the State guarantee to credit institutions and financial companies specifies, for its part, that the companies in question must self-certify “that they suffer a strong impact from the economic disturbances generated by the consequences of the Russian aggression against Ukraine “. This certification is therefore carried out on a declarative basis.

8. Of course, a company that has no special needs related to this crisis could be denied this PGE resilience by its bank.4.

9. In practice, among the companies concerned, we should find those that have saturated their PGE endowment, those that have not obtained a PGE in the past or those that have not reached their debt ceiling.5.

B – Loan amount

10. PGE resilience allows you to cover up to 15% of the average annual turnover of the last three years, so that companies can cope with any cash flow difficulties.

11. Above all, and this is what makes it so interesting, it can be combined with the “classic” PGE, that is, the one established at the beginning of the health crisis. For the record, the latter allowed, until June 30, 2022, a company to borrow up to 25% of its turnover.

12. Article 5, I, definitelyof the decree of 23 March 2020 granting the State guarantee to credit institutions and financial companies, therefore declares that “the ceiling is equal to the sum of the amount calculated in application of the previous paragraphs cumulated with an amount corresponding to 15% of their average turnover recorded in the last three years, or in the last two years if they have only two years or in the last year if they have only one year, or calculated as an annualized turnover figure by linear projection from the turnover achieved to date if they do not have an accounting period Closed”.

C – State guarantee

13. The state guarantee cannot cover the entire loan in question. In fact, it covers only a percentage of the amount of principal, interest and accessories remaining from the debt until the expiry of its duration, “unless it is called before during a credit event”6. However, this percentage varies depending on the size of the company. The banks therefore retain, in any case, a share of the associated risk7. Furthermore, no other guarantee or surety is possible8.

14. Specifically, this percentage is:

  • 90% for companies that, in the last financial year closed, or if they never closed a financial year, on March 16, 2019, employed at least 5,000 employees in France and achieved a turnover of less than 1.5 billion euros;

  • 80% for the other companies which, in the last financial year, achieved a turnover of less than 5 billion euros;

  • 70% for other companies.

15. The refundable amount, to which the guaranteed part applies, corresponds to the loss found, where applicable, “following the exercise by the credit institution (…) of all the friendly and possibly legal remedies it deems useful, in the extent to which they normally could have been exercised “9.

16. On the other hand, it should be emphasized that the guarantee in question can only be acquired after a waiting period10. Specifically, in the event that a “credit event” occurs within two months of the loan being disbursed, the state guarantee cannot come into play.11.

17. But what is meant as a “credit event”? Article 6, III, of the decree of 23 March 2020 indicates this. Three hypotheses are taken into consideration. This applies in particular in the event of non-payment of any sum owed to the lender by the borrower under the state-guaranteed loan under the loan agreement, even in the event of prepayment resulting from a contractually stipulated event. The article also mentions the case of loan restructuring as well as the opening of collective proceedings.

D – Remuneration of the guarantee

18. As for the “classic” PGE, the studied guarantee is not free for the borrower company. In fact, a fee is foreseen12. The invoicing of this guarantee, validated by the European Commission on 21 March 2020, results from a scale that depends on the size of the company and the maturity of the loan it covers.13. There are two situations.

19. Firstly, for companies which, in the last financial year ended, employ more than 250 employees, or which have both a turnover of more than 50 million euros and a balance sheet total of more than 43 million euros, a first ladder. The first year the guarantee premium is set at 50 basis points (0.5%). At the end of the first year, if the borrower decides to amortize the loan over an additional period, the guarantee premium is fixed:

  • for 1D. additional year, at 100 basis points (1%);

  • for the 2And additional year, at 100 basis points (1%);

  • for the 3And additional year, at 200 basis points (2%);

  • for the 4And additional year, at 200 basis points (2%);

  • for the 5And additional year, at 200 basis points (2%).

20. Secondly, for smaller companies, which are logically more numerous, another scale is needed. The guarantee premium is set at 25 basis points (0.25%) in the first year. At the end of the first year, if the borrower decides to amortize the loan over an additional period, the guarantee premium is fixed:

  • for 1D. additional year, at 50 basis points (0.5%);

  • for the 2And additional year, at 50 basis points (0.5%);

  • for the 3And additional year, at 100 basis points (1%);

  • for the 4And additional year, at 100 basis points (1%);

  • for the 5And additional year, at 100 basis points (1%).

E – Methods of reimbursement

21. The beneficiaries of the resilience PGE can choose the rules for repayment and amortization of their loan, in the same way as for the “classic” PGE established in the context of the health crisis.

22. We therefore observe the law applicable to the latter. Indicates that the loan must necessarily include a minimum grace period of 12 months and a clause that gives the borrower the possibility, at the end of the first year, to amortize it over a further period calculated in years, at his choice and within the limit of one maximum number of years provided for by the decree of 23 March 202014. However, Article 2 of the latter refers to a further depreciation period of one, two, three, four or five years15. So, more simply, no repayment can be requested in the first year by the lender and the company is therefore free to amortize the loan over a maximum period of five additional years.

23. The duration of the loan cannot in any case exceed the period of six years from the date of the first disbursement of the loan.16.

F – Lifespan of the device

24. PGE resilience is available from April 8, 2022. Applications can then be sent from that date by eligible companies to your bank.

25. The system was to end, like the “classic” EMP, on 30 June 2022. However, it was expected that it could be extended by the financial law, according to the provisional framework linked to the situation in Ukraine of the European Commission, until 31 December 202217.

26. However, this extension has just been decided. In fact, article 23 of law n ° 2022-1157 of 16 August 2022 of the Amending Finance for 2022 is considering this solution18. PGE resilience can then be deployed by banks until December 31, 202219.

27. But does this device challenge the principle that there is no right to credit? Never.

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