Bruno Henon no longer knows where to turn. In 2020, this manager of a 1,000 square meter furniture store located in Saône-et-Loire, was forced to successively subscribe to two loans guaranteed by the State (PGE) after the two confinements. Amounting to 50,000 euros each and spread over five years, they enabled him to keep the ship afloat until businesses reopened in France.
The boss and his three employees, including his wife, were not at the end of their troubles. They, like many other companies in France, have had to weather the storm of the energy crisis and the rise in the cost of raw materials, while a hurricane awaits them: the furniture sector is in turmoil and, like textiles, could experience a dark year in 2024. The PGE has now become a burden, as the fateful end date of the loan draws closer, preventing it from making new necessary investments and, above all, from pay yourself properly. “I am on minimum wage at 61. I prefer to prioritize my two other employees,” confides Bruno Henon.
Worried leaders
Like him, many managers of VSEs and SMEs find themselves stuck with their EMP. A survey carried out by the Confederation of Small and Medium Enterprises (CPME) among 1,418 bosses, between November 9 and December 9, showed that 28% of them were finding it increasingly difficult to repay it. “We see that either the business manager pays himself less, or he limits his material or human investments by renouncing recruitment or the acquisition of equipment. The PGE calls into question the overall balance of the cash flow,” says Marc Sanchez, general secretary of the union of Independents and VSEs (SDI).
Did the alert ring in Bercy’s ears? Bruno Le Maire announced on January 7 the extension until 2026 of the possibility for companies to reschedule their EMP. “It’s a pragmatic signal. When companies are not able to repay their debts right away, sit around the table to see what we can do to save them while guaranteeing bank loans and State money seems natural”, comments economist Laurent Bach. At the Ministry of the Economy, we refuse to raise the red flag. “There is currently no greater difficulty than with other loans. Does this mean that there is no difficulty at the individual level? No. The aggregate figures are very good, but they can hide more tense situations”, we recognize from the office of the Minister of the Economy. As for the fears expressed by the employers’ unions, Bercy temporizes: “When you go to see entrepreneurs and you ask them if they have any concerns, it is normal that many of them respond in the affirmative.”
Same story from the Banque de France and the credit mediator, the service which is responsible for managing the rescheduling system. In 2022 and 2023, 560 companies – out of the 682,000 having benefited from an EMP – submitted a file. “We chose 2026 because this is overwhelmingly the final deadline. This is happening as planned. We have no increase in guarantee calls and we have extended the system to give flexibility to companies”, assures Frédéric Visnovsky, national credit mediator. The names of the sectors concerned will not surprise anyone: “It is especially commerce, catering-hotels and construction which require mediation, the French Banking Federation is informed. Logically, they had benefited greatly from the EMPs, during confinements”.
An underestimated number?
So how can we explain the gap between the number of restructurings and the anxieties raised by employers’ organizations? “The Banque de France bases itself on the elements they have and as they do not receive many files, this skews the analysis,” says the president of a federation. “Believe me, there are more than 560 who are struggling,” says Jean-Eudes du Mesnil, general secretary of the CPME. In reality, several factors come into play. Some managers would refrain from requesting the activation of the procedure for fear of harming the reputation of their company. “When you turn to credit mediation and you manage to obtain an extension, you will be considered in bank default. No one will lend you any more money because you are branded with a hot iron,” assures Jean-Eudes du Mesnil. For companies whose annual turnover exceeds 750,000 euros, the Banque de France also assigns a rating which assesses their financial health. In the event of mediation, this is found to be degraded. An additional obstacle for certain leaders. “The vast majority of VSEs are not rated,” adds Bruno Le Maire’s office. “For larger companies, the rating is a very fine thermometer with 24 levels.”
Employers’ organizations are demanding that the EMP be taken out of the banking framework in order to remove a weight from the shoulders of business leaders. “If the bank accepts the restructuring, it is like a collective procedure: we will review all the company’s outstanding debts, with a renegotiation. Business leaders do not want to contact their suppliers. The economic signal sent is very bad”, points out Marc Sanchez of the SDI. However, this measure would be complex to implement, according to Laurent Jourdan, partner at Racine. “When we proposed the PGE, we needed an instrument to do it. The easiest thing was to go through the banks because they knew their customers. It would be complicated to get them out,” believes this lawyer specializing in restructuring.
The year 2024 promises to be perilous
The new deadline granted by Bercy could, however, convince the last holdouts. “It is legitimate to say that relaxing the financial grip on these companies is not unreasonable. Those which have already repaid were perfectly solvent. The government’s objective is to avoid having to manage a wall of bankruptcies “, underlines Anthony Morlet-Lavidalie, economist at the Rexecode Institute. Especially since their number in 2023 has almost returned to its pre-Covid level. A catch-up effect, assures the Bank of France, but which requires vigilance. “We cannot prevent all failures. We talk a lot about clothing, this corresponds to changes in customer behavior, there are developments as there always have been, recalls the national credit mediator Frédéric Visnovsky One of our recommendations is prevention: the longer companies wait, the quicker they will go into liquidation.”
For Jean-François Ferrando, president of the National Confederation of Very Small Enterprises (CNTPE), the minister’s announcement is above all “comms”. They don’t know how it works. When you are a company and you have fewer customers, your energy costs explode, your payroll soars and your margins shrink, the PGE becomes a burden.”
And as the 2026 deadline draws closer, the situation could become more complicated. “Half of the EMPs which were reimbursed concerned companies which were doing well. Here we are entering into the hard part, it is companies in difficulty which will be concerned”, anticipates Anthony Morlet-Lavidalie. In addition, the French economic environment looks gloomy to say the least, with low expected growth, constrained by high interest rates and sluggish consumption. Several sectors, made up of numerous VSEs and SMEs, such as construction, textiles and furniture, are particularly suffering. “We have changed world. We have come out of a period where companies had managed to accumulate quite a bit of cash. This liquidity has been consumed, the parenthesis has closed in France. In addition, the lack of demand is increasingly invoked”, adds the economist. This pessimism is not shared by Bruno Le Maire’s teams: “The economy is resilient. The hardest part is behind us. There have been difficulties, but today the consensus shows that 2024 is the year of recovery”. A Coué method which will not be enough to convince the managers of VSEs and SMEs.
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