The eco brief. The State strengthens its support system for businesses

Strengthening a company’s equity capital is quite simply strengthening its capital – its backbone – to enable it to consolidate its bases and continue to invest to maintain employment and wages. The fall in turnover combined with the fixed costs of companies has a direct impact on their cash flow. This is where they need to be helped. It is not a question of 20 billion suddenly taken out of the hat. The recovery plan presented in September by Prime Minister Jean Castex already provided for the device but the amount remained to be determined.

This will be done through what are called equity loans. The twenty billion euros in question will be loaned to companies by the banks to which the State will provide its guarantee. According to the roadmap unveiled Monday, October 19 by the Minister of the Economy, Finance and Recovery Bruno Le Maire, these loans must be available from the first quarter of next year.

The equity loan responds to very specific rules. It is aimed at companies that have cash flow difficulties but which we know have a real capacity to rebound once the crisis has passed. Put it plainly: Dying businesses, lame ducks, don’t have access. For the state, it is not a question of putting money in bottomless pits. It is especially SMEs, SMIs and ETIs (Intermediate-sized companies) that are concerned. Companies which, because of the crisis linked to the pandemic, have become more indebted than they should.

According to the Ministry of the Economy, corporate debt increased by 152 billion euros between March (start of containment) and June. It is a real brake on the recovery that the State intends to remove with these participatory loans. More than a band-aid, it is a real “lift” for sick economic players who have a hope of survival.