Participative Loans for SMEs and ETIs
Participative Loans for SMEs and ETIs
On the 4th March, the terms and conditions of the Prêts Participatifs Relance (PPR) were presented, jointly developed by the State, French banks and investors, notably insurers.
These PPRs are a recovery tool for companies with development projects that need to strengthen their balance sheet in order to find investment capacity and the means to finance their projects. They will be available from May 2021 in the banking networks until the end of June 2022.
Business owners can contact their bank advisors to access the Participatory Recovery Loans. These loans are considered as quasi-equity because they are spread over a relatively long period (8 years) and because their repayment does not take priority over other debts. The aim is to strengthen the balance sheet of SMEs (with a turnover of more than EUR 2 million) and SMIs.
Who can benefit from Relance equity loans?
Companies with the following characteristics, among others, can apply for a PP Relance:
- Be an SME with a turnover in 2019 of €2M or more or an Intermediate Size Company (ISC)
- Present a business or investment plan to justify that the funds lent will be used to boost investment and not to cover cash needs to pay current bills
- Have a rating assessed by the bank of at least BB- (or equivalent) at the time the equity loan is granted
What are the characteristics of the Equity Loan?
PPRs are intended to finance investment. They have a maturity of 8 years and a 4-year grace period.
The minimum amount is €200,000, but it can go up to €100 million.
They thus make it possible to strengthen the company's balance sheet, without modifying its capital or its governance.
How is the amount of a Relance equity loan that a company can take out calculated?
The Relaunch equity loan can represent 12.5% of annual turnover for an SME or 8.4% for an SME.
A company that has used an EMP can also apply for an equity loan. If the overall common ceiling of 25% of annual turnover is exceeded, the maximum amount of the EMP is:
- 10% of turnover for SMEs (instead of 12.5%)
- 5% of turnover for SMEs (instead of 8.4%)
What is the cost of an equity loan?
This mechanism for reinforcing the top end of the balance sheet has been designed in such a way as to present an attractive cost for companies, thanks in particular to the State guarantee (remunerated at 0.9% for SMEs and 1.8% for ETIs).
The rate will be set by each banking institution.
How to obtain a Relance equity loan? Who to contact?
Banks will distribute equity loans from the very beginning of May 2021 until 30 June 2022. The banks are the company's contact for the entire duration of the financing.
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