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France Plans To Raise 20 Billion Euros For Essentially Capital Loans
France plans to raise 20 billion euros for essentially capital loans for small businesses affected by the crisis caused by the new coronavirus pandemic.
Yazar: Tom Roberts
Yayınlanma: 16 Ekim 2020 22:41
Güncellenme: 17 Eylül 2024 12:08
France Plans To Raise 20 Billion Euros For Essentially Capital Loans
France plans to raise 20 billion euros for essentially capital loans for small businesses affected by the crisis caused by the new coronavirus pandemic. This is done by offering investors a state guarantee for losses of up to 2 billion euros. This was stated by sources from the cabinet, which did not want to be named. The French government is concerned about the collapse of companies. Many of them were already struggling with high levels of debt before the crisis.Finances for capable companies
The Cabinet wants to launch this program early next year to combat the economic consequences of the COVID-19 pandemic. According to plans to be presented to the financial sector on Monday, banks would first lend to small and medium-sized companies and then sell 90 percent of the loans to institutional investors, sources familiar with the proposals said. This would reduce the risk to which banks are exposed to 10 percent and at the same time divert funds to viable companies.Government guarantees must be assessed by the EU
Given that public guarantees are at stake, the relevant state aid regulators in the European Union must also give the green light to this program. Especially when it comes to the interest rate. "The discussion is going well, the European Commission is very interested in the program, but we have not yet reached the exact numbers," said a source from the Ministry of Finance. It is unlikely that the interest rate will be lower than 3 to 5 percent, because these loans would be lower in companies' balance sheets than other debts, another source familiar with the discussions said. Loans with a maturity of at least seven years and subordinated to the claims of other creditors will have the advantage of not being counted as debt in the balance sheets, which will free up financial resources for operations and investments that are crucial for economic recovery. Although French law already allows such loans, they are rarely used because banks have so far had to set aside more capital to cover the greater risks they entail. Given that the crisis has reduced companies' cash, the French central bank and the Ministry of Finance estimate that small and medium-sized enterprises will need capital injections of up to € 20 billion.İLGİLİ HABERLER
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