One of the emblematic measures of these emergency policies is the EUR 300 billion state guarantee scheme for new loans granted by financial institutions to certain French businesses (the “Scheme”). This measure results from a decision taken on March 16th at the European level to grant EUR 1,000 billion guarantees from the Member States of the euro zone for bank loans to ensure cash flow for the economy in the Euro Zone.
The eligibility criteria, applicable conditions and procedure in place to benefit from the scheme are set out in a law amending the 2020 Finance Act, dated 23 March 2020 (the "Law") and further specified in a decree of 23 March 2020 (the “Decree"). The French public bank Bpifrance Financement SA (“Bpifrance”) is vested with the administration of the scheme on behalf of the French State.
The purpose of this Alert is to provide an overview of the key features of this new Scheme.
- General Case: 25% of the 2019 total revenue of the borrower, if known, or of the total revenue of the borrower’s last available financial year;
- Specific Cases: (i) Innovative companies (i.e. meeting at least one of the criteria set in paragraph II of Article D. 313-45-1 of the French Code for the Entry and Residence of Foreigners and Right of Asylum): up to twice the total payroll (for France) amount for 2019, if such a cap is more favorable to the company than the general cap mentioned above; and (ii) Legal entities set up as from 1 January 2019: the estimated amount of the total payroll (for France) for the first two years of business activity.
The loan agreement may provide for a "safeguard clause" under which repayment would become immediately due in the event of detection, after the loan has been granted, of non-compliance with the criteria set out above, in particular as a result of incorrect information given by the borrower.
- 90% for companies with less than 5,000 employees and total revenues of less than EUR 1.5 billion in the last financial year (or if they have never closed a financial year on 16 March 2019),
- 80% for other companies with total revenues of more than 1.5 billion euros but lower than 5 billion euros in the last financial year
- 70% for other companies.
- Credit event in relation to a restructuring of the loan: the indemnifiable amount will be determined after taking into account the value of the remaining claim held by the lender further to the restructuring;
- Credit event in relation to insolvency proceedings: the indemnifiable amount will be determined at the end of the insolvency process, taking into account amounts collected by the lender.
Other borrowers, after obtaining their bank(s) pre-approval for the granting of a loan meeting all the eligibility conditions of the Scheme, will have to obtain a username certificate from Bpifrance by filling in the information requested on the following website: https://attestation-pge.bpifrance.fr/description. The borrower shall, in turn, provide that username certificate to the relevant lenders before they can finalize the financing and make the funds available to the borrower.