Government Guaranteed Loan (PGE): 1 in 10 businesses may not be able to repay!

While the Covid-19 crisis has severely damaged the French economy, and the French state has provided considerable support to the economy, including businesses already weakened before the crisis, the president of the French Banking Federation is launching a warning. Between 5 and 10% of the 638,000 companies having taken out a loan guaranteed by the State (PGE) could not be able in the long term to repay this credit, estimated Philippe Brassac. “We are going to enter this phase where the EMPs are reimbursable, from April, May or June (…) we will see in a few months the real situation of companies”, declared Mr. Brassac, who is also Chief Executive Officer of Crédit Agricole SA Group, during an interview on Radio Classique.

“What we think, (…) is that considering that a majority of companies consider their financial situation to be healthy today, we could probably have half of the EMPs that could be repaid in the first year, in total three quarters in two years, “detailed the banking manager. On the other hand, “one estimates between 5 and 10% the companies which today think that it will be difficult for them in fine to reimburse the EMP”, for an amount of approximately six billion euros, estimated Mr. Brassac, while specifying that these figures are to be taken with caution given that “there are many risks”. In total, more than 638,000 PGEs have been distributed by banks, amounting to around 130 billion euros, according to figures from the Ministry of the Economy and Finance.

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From the start of the health crisis, the State announced the launch of these loans, distributed by banking establishments and benefiting from a public guarantee of up to 90% of the amount loaned in most cases. This device initially provided for a period of one year before banks could demand repayment of loans.

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This deadline was therefore due to expire at the end of March for some companies, while many of them are still experiencing financial difficulties. But in a context more uncertain than ever, companies will finally have the “right” to benefit from their bank for an additional year to start repaying the loans guaranteed by the State (PGE), taken out to face the crisis. , announced Thursday the Minister of Economy and Finance Bruno Le Maire.

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