PARIS (Reuters) – France is set to expand aid measures to help small businesses hit by the coronavirus pandemic with a € 20 billion ($ 23.5 billion) loan program in quasi-equity partially supported by the state, the government announced on Monday.
The program, which would involve funding from institutional investors such as insurers, comes on top of a € 300 billion package of state-guaranteed loans made available earlier this year as the pandemic worsened and that many companies had to shut down operations or draw on emergency cash flow.
The new scheme, which would be operational in the first quarter of 2021, aims to offer small unlisted companies financing options that would not involve taking on purer debt, which would risk derailing them as the recession bites.
French companies were already grappling with record debt levels before the crisis, and the government fears overburdened companies will back down on their investment plans even more as it tries to revive the economy.
Economy Minister Bruno Le Maire said on Monday that the latest program, which is still under discussion with EU state aid regulators, would put between € 10 billion and € 20 billion in equity-type instruments available to businesses.
Banks would lend to small and medium-sized businesses first, then sell 90% of the loans to institutional investors, people familiar with the proposals told Reuters, while the plan would benefit from a partial state guarantee.
Details, including on the interest rates offered, will be finalized in the coming weeks, Le Maire added. The program would last until the end of 2022.
Unlike government-guaranteed loans, which were aimed at helping businesses solve pressing cash flow issues, quasi-equity loans would be more geared towards helping promising businesses that have been held back by the crisis to speed up their investment plans. .