Bruno Le Maire: 20 Billion Euros to Strengthen Companies’ Equity
French finance minister Le Maire announced on Monday that 20 billion euros would be devoted to strengthening companies’ equity through equity loans distributed by banks to which the State will provide its guarantee.
“We have, and I have personally, heard criticism from a number of economists that these equity loans are insufficient, the rebuilding needs to be stronger. And so we have now set as ambition 20 billion euros in outstanding participatory loans for the reconstitution of corporate equity, “the minister said at a press conference. This goal must be achieved by the end of 2022.
The 100 billion stimulus plan already provided for this device but the precise amount remained to be defined. The Finance bill for 2021 will be amended in this sense, added Bruno Le Maire. The President of the French Banking Federation, Philippe Brassac, specified that unlike the loan guaranteed by the State, which is aimed at companies that have “cash flow difficulties”, equity loans are intended for those who have “A real potential for a rebound, but which were penalized by a loss-making operation during the year” and which therefore need to “redotate capital”.
According to the roadmap presented on Monday, these equity loans must be available from the first quarter of 2021. In addition, in order to drain “Covid savings” from households, which currently stands at 87 billion euros, towards the financing of companies, it was also announced the establishment of a “Relance” label for collective investment undertakings investing in French SMEs.
An initiative which should make it possible to “mobilize 10 to 20 billion euros” for the benefit of companies to help them overcome the crisis, according to the minister. The General Confederation of Small and Medium-Sized Enterprises (CGPME) welcomed in a press release “concrete progress in favor of business financing”.
With regard to participatory loans, they must however “be simple and accessible, under penalty of missing their target”, their “repayments spread over a period of 10 years, and the system must not exclude viable companies before the crisis” , she warned.