The Grand Est Participative Loan

Published the 10/03/21 | Territorial life

The Grand Est Participative Loan

The Grand Est Participative Loan was launched as part of the Business Act, the economic roadmap for the Grand Est Region.

This is a financing solution that enables the region’s VSEs and SMEs to carry out their projects. They benefit from a free guarantee from the Grand Est Region via the European Investment Fund (EIF).

These loans are treated as quasi-equity and are intended to finance a growth or development project. They have a term of 7 years, with a minimum grace period of 2 years. They can be for up to €500,000 and are granted by three banks: Caisse d’Epargne Gd Est Europe, Crédit Agricole Alsace Vosges and Banque Populaire Alsace Lorraine Champagne.

The interest rate does not exceed 3.5% or Euribor + 4.

The PPSE (State Supported Participative Loan): a scheme to strengthen the equity capital of SMEs and ETIs

As corporate debt has increased since the start of the economic crisis, PPSEs (Prêts Participatifs Soutenus par l’État – State-backed Equity Loans) aim to maintain or renew the capacity of SMEs and STIs to grow and invest by strengthening their equity capital.

The PPSE, distributed by banks, provides long-term financing without opening up capital.

This 8-year loan is repayable after 4 years, allowing companies to wait until their investments are profitable without affecting cash flow or profitability.

Interest rates have been set at 4% for SMEs and 5% for ETIs.

The Relance equity loan has been available since May 2021 and is still active.

The amount of the loan can be up to 12.5% of 2019 sales for small and medium-sized enterprises (SMEs) and 8.4% of sales for intermediate-sized enterprises (ETIs).

A Relance equity loan is fully compatible with the granting of a government-guaranteed loan (PGE), even if the company has reached the PGE ceiling. However, companies that have already taken out a government-guaranteed loan are entitled to a slightly smaller equity loan than other companies: 10% of their 2019 sales for an SME and 5% for an ETI.

Relance Bonds

The ORs join the Relance equity loans to support businesses and remain accessible. Like the PPSE, they are designed to strengthen the balance sheet of French companies.

Designed for SMEs and SMIs looking to grow and invest without opening up their share capital to outside shareholders, ORs are distributed by management companies on behalf of a local fund. This fund is the Obligations Relance investment fund, managed by 20 investors, i.e. 19 insurance companies plus Caisse des Dépôts.

The bonds are redeemable in one go after 8 years.

The government guarantees up to 30% of the losses incurred by the investment fund.

The rate varies between 5% and 6% depending on the size of the company.