Five years on, state-guaranteed loans (PGE) haunt French firms

In response to the health crisis in 2020, the French government introduced state-guaranteed loans (PGE) to prevent a chain reaction of company collapses by offering them massive cash support. This mechanism, which was expanded as the “PGE Résilience” in response to the Ukraine crisis, resulted in a €144 billion cash injection into the economy, benefiting very small businesses in particular. Despite its initial effectiveness, the ability of companies to repay these loans is still a key problem today, as the number of corporate insolvencies has risen sharply since 2023.

Most companies have started to repay their state-guaranteed loans, but there are large differences depending on their financial strength. The strongest companies have repaid quickly, while the weakest are struggling to make their repayments. In June 2024, around 30% of the total stock of state-guaranteed loans remained to be repaid, and 4% of VSEs and SMEs fear that they will never be able to repay their debts, which is a sign of the continued vulnerability of some companies.

In response to these difficulties, restructuring mechanisms have been introduced, such as the extension of the repayment delay of the agreement between the Banque de France, the French Economy Ministry and the French Banking Federation, which makes it possible to spread the debt over 10 years. Even if only a few companies currently make use of this solution, these mechanisms, combined with preventive procedures such as conciliation or the ad hoc mandate, are a valuable tool for avoiding bankruptcy, provided that companies show a willingness to change their situation.

Read here the full version of this article published in Option Droits & Affaires on 1st April 2025 (available in French).