At the end of the Council of Ministers of March 18, 2020, the government decided to present to the legislator an amending finance bill for 2020 which aims to:
- on the one hand, to establish a State guarantee for loans granted to companies by banks for 300 billion euros and;
- on the other hand, to open emergency credits aimed at financing the emergency measures already adopted or whose adoption is scheduled in the coming days: namely a need of 45 billion euros to support the economy and businesses
- partial activity, which will be made more protective for workers (measure estimated at 5.5 billion euros),
- a compensation fund for very small businesses, co-financed by the regions,
- the deferral of tax and social charges for the month of March,
- the provision necessary to support caregivers in the hospital (equipment, salaries, etc. a need estimated at 2 billion euros).
France's growth assumption for 2020 is set at -1% (in agreement with the estimates of European authorities), which would bring the public deficit to 3.9% of GDP (compared to 2.2% initially forecast when of the establishment of the BIA for 2020).
Highlights of this project:
- the regions will be called upon to contribute, without any compensation currently being provided for in the text: the overall aid for the regions would be 250 million euros;
- the "great fragility" of the forecasts given the context of "exceptionally high" uncertainty according to the High Council of Public Finances in its opinion of March 17, 2020.
The report on the evolution of the economic and budgetary situation specifies that the forecast, on which this project was established, "is marked by a high level of uncertainty, due to the impossibility of evaluating with precision at this stage the duration of the measures necessary to curb the epidemic, as well as the persistence over time of the economic effects of the epidemic on the national territory. »
Two strong assumptions have been made by the government: confinement limited to one month and a rapid return to normal in French and international demand.
The amending finance law for 2020 organizes the State guarantee granted for loans granted by credit institutions and financing companies for the benefit of non-financial companies registered in France, between March 16, 2020 and December 31, 2020 (overall guaranteed outstanding: 300 billion euros).
The loans covered will be defined by specifications defined by order of the Minister of the Economy.
In addition, they must meet the following minimum conditions :
- a minimum grace period of 12 months;
- a clause giving the borrower the option, at the end of the first year, to amortize them over an additional period calculated in number of years (to be defined by ministerial decree);
- be an additional loan in relation to the total loans already granted by the banking institution concerned before March 16, 2020.
The State guarantee will be remunerated and cannot cover the entire loan concerned. It is acquired only after a waiting period, fixed by the specifications.
This State guarantee may not be granted for loans benefiting companies subject to safeguard, receivership or court-ordered liquidation proceedings.
Bpifrance is designated as the establishment charged by the State with monitoring the outstanding amounts of guaranteed loans, collecting and paying back to the State the guarantee commissions and verifying, in the event of a call on the guarantee , that the conditions are met.
Bpifrance which have a turnover of less than 1.5 billion euros. For companies that are above these thresholds, requests for guarantees will be granted by order of the minister responsible for the economy.
of a monitoring committee under the direction of the Prime Minister (modification of article 4 PLFR) were added to the initially prepared draft by the National Assembly
This monitoring committee will be set up to oversee the implementation and evaluation of emergency measures, namely financial support for companies facing the Covid-19 epidemic, the State guarantee and the fund of solidarity.
The adoption of this amending finance bill dated March 20, 2020 took place in less than 3 days by Parliament, due to the urgency of the situation:
- Draft adopted in 1st reading on March 19, 2020 at the National Assembly.
- Amended draft adopted at 1st reading on March 20, 2020 by the Senate, without any modification.
We should expect a second amending finance law in the coming months, in particular to consider measures to stimulate the economy. This is also the reason why the amendment to the report of the Senate Finance Committee, aimed at exempting from tax and social contributions overtime worked by employees exposed to a significant health risk due to the coronavirus , has been removed.
Press contact: mmietkiewicz@arst-avocats.com
JULIETTE SELLIER
associate lawyer
Lawyer at the Paris Bar. Holder of a Master 2 in general private law and a Master 2 in business law and taxation from the University of Paris I Panthéon-Sorbonne (in partnership with HEC)
