As a reminder, to support companies during Coronavirus crisis, the French government, in March 2020, implemented an exceptional guarantee scheme to support bank financing for businesses, to the tune of 300 billion euros.
Until 31 December 2020, businesses of all sizes, whatever their legal form and activity (including companies, traders, craftsmen, farmers, liberal professions, micro-entrepreneurs, associations and foundations with an economic activity) will be able to apply to their usual bank for a State-guaranteed loan to support their cash flow.
This loan may represent up to 3 months of turnover in 2019 or 25 % of 2019 turnover.
In May 2020, the French government developed a recovery plan specifically dedicated to the tourism sector. As part of this plan, a new loan called “state season guaranteed loan” is available as of August 5th to sustain touristic activity with a global amount of 1 billion euros. This guaranteed loan was created to include tourism, hospitality, restauration, sport, leisure, cultural and event activities. The difference with the classic state guaranteed loan is that instead of having a maximum loan of 25 % of 2019 turnover, the touristic sector will be able to apply for a loan representing the best 3 months of 2019 activity, which can for example represents 80 % of their 2019 turnover.
For activities with high seasonality, this represents a large difference compared to the “classic state-guaranteed loan”. To be eligible for the season guaranteed loan, companies have to verify their NAF code (French activity code), a list of eligible NAF codes is available in order to check if the company activity is eligible or not.
As with the classic state-guaranteed loan, no repayment will be required in the first year. The company may choose to amortize the loan over a maximum period of 5 years. Banks undertake to distribute state season guaranteed loans, at interest rate cost price without any margin on the interest rate, plus a commission representing the cost of the public guarantee. Depending on the size of the company the commission will be between 0.25 % to 0.5 % of the amount of the loan for the first year. Please note however that this commission, payable by the borrower will not be cashed out during the first year.
The “State Season guaranteed loan” can complete one or two other classic guaranteed loans, and the process to obtain it is the same as for classic guaranteed loan: the first step is to approach your usual banking partner to apply.
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