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Responsible finance - Investing differently2021/02/22
State-guaranteed loans: where are we one year later?
An update on an essential support scheme for many professionals and businesses affected by the health crisis which nearly 678,000 businesses benefited over the past year.
Launched on 24 March 2020, at the height of the crisis, State-guaranteed loans (SGLs) aim to help economic actors benefit from a cash advance, following the cessation or reduction of their activity. These loans are granted by banks, at cost, to businesses, professionals, and farmers, and “secured” by a guarantee provided by the State for a large portion of the amount, via Bpifrance. SGLs are a central element of the government's recovery plan.
A scheme largely used…
At the national level
SGLs were rapidly and massively deployed: at mid-February 2021, nearly 678,000 businesses benefited from such loans for a total of €133bn. The overall rate of refusal of applications was low, at around 2.8%.
It was very small businesses - those with revenue of less than €2m - that demonstrated the greatest appetite for this scheme: they have accounted for approximately 88% of beneficiaries. The amounts granted to them account for more than 40% of the total loans. Small- to medium-sized businesses were granted 34% of the total to date.
Below are the Banque de France’s figures of entities that had benefited from an SGL at 26 February 2021, with a breakdown by business sector.
By the Crédit Agricole Group
At mid-February, the Group had granted 178,200 SGLs, or 26.3% of the total granted, making it the leading bank in France on this front. In terms of amounts, the loans granted by the Group account for more than €27bn, or 23.6% of the total granted. The rate of refusal was slightly below the average among banks, at 2.73% compared with 2.8% for all institutions. These figures, which exceed the Group’s market share, demonstrate its mobilisation during this unprecedented period.
But above and beyond figures, the Group’s commitment has been highly focused on quality: for example, dedicated training sessions were put in place with IFCAM for business, professional, and agricultural customer advisers in order to support customers as effectively as possible in this unusual context.
Customer feedback has been very positive overall: they have felt listened to, understood and, above all, supported during this period. It should be noted that, for the first time, Crédit Agricole is positioned as a leader on the Professional customers market in the IPSOS image survey: customers have highlighted the bank’s responsiveness and its capacity to advise them effectively.
For Benoît Passaga, Head of Corporate Markets and the Public Sector at Crédit Agricole SA/DCH, “the Group has demonstrated an exceptional level of adaptability to successfully implement SGLs.
The collective effort has accelerated among the specialised Professional, Business and Agriculture markets of the different Group networks (regional banks, LCL, and CACIB), the User Divisions (Loans, Risk, Corporate, Finance), CATS, the legal, risk, financial, RCR, public affairs, and communication teams of Crédit Agricole SA, the subsidiaries (CAAPE and CALF), and the FNCA.
I would like to highlight in particular the work of the User Divisions and Credit Product teams, in collaboration with their reference regional banks: they largely facilitated the action of advisers and business advisers through the digitalisation and automation of adviser and customer processes.
The Group’s successful implementation of SGLs is a point of pride, as are its efforts to further set us apart in our support for our customers in the post-Covid recovery.”
…which led the government, in cooperation with the FBF, to adapt the terms
The success of the scheme and the duration of the health crisis led the Ministry of the Economy, Finance and Recovery, in cooperation with the French Banking Federation, to grant all businesses, regardless of their activity or size, the right to obtain a deferral of one additional year to begin repaying their State-guaranteed loan (SGL) as of 14 January.
A business that took out a SGL in April 2020, and that does not wish to begin repayment at the end of the first year, can therefore request a deferral of one year and begin repayment of its principal in April 2022. All businesses are currently contacted by their advisers or business advisers to decide together on a repayment plan for their SGL.
Moreover, SGLs initially opened until 31 December 2020 have been extended, for all businesses, until 30 June 2021.
Will customers who took out the first SGLs, nearly one year ago, decide to begin repayment or opt for a longer-term amortization? According to a study carried out at end February with the regional banks, of approximately 12,000 SGL beneficiaries, more than 80% intended to choose amortisation (this decision must be taken one month before the maturity date). In this case, the transformation process developed by the CATS teams will be largely automated and, through the use of a robot, will allow for a mass processing of more than 80% of SGLs. Customers will be able to sign contracts electronically.
Lien vers la video CATS ?
In the LCL network, of approximately 10,000 Professional and Business customers who have already stated their choice, 94% of them wish to amortise their SGL, and for a large majority over a period of five years. Here, too, customer satisfaction has guided the development decisions made by IT teams.