Small businesses that chose to repay their PGE immediately entered the Covid crisis with more liquidity
The decision to immediately and fully repay your loan one year after approval depends on a large number of factors. We observe that size is a decisive factor: only 10% of micro and very small enterprises (SMEs) choose to repay their entire EMP in 2021, compared to 15% of medium-sized enterprises (ME) and 26% of medium-sized enterprises ( ETI) as shown in graph G3.
Furthermore, the cash flow situation on the eve of the March 2020 lockdown is likely to influence this decision. Thus, we observe (Graph G3) that the median cash flow at the end of 2019 is higher for companies that choose to repay their loan immediately and in full than for those that choose to repay it gradually, with or without a year grace period.
We also note that liquidity is not only a discriminating element for small companies, but also that the cash flow for companies that pay immediately and in full, in terms of number of days’ turnover, is significantly greater for SMEs than for medium-sized companies.
The smaller the company, the more it spreads its reimbursement over time
One year after signing an EMP, that is in the spring of 2021 for the majority of EMPs, if the company has decided not to repay its loan immediately and in full, it must choose the duration of the amortization ( up to 5 years). However, it can postpone this reimbursement for another year: in this case, the reimbursement is made over 1 to 4 years (at most) to stay within the limit of 6 years after the grant date (see graph G1).
This choice to postpone the start of repayment is often made among companies that have not fully repaid a year after the loan was granted. However, it is more favored by the largest companies considered here: 72% of medium-sized companies have chosen to postpone an EMP, compared to 62% of micro-companies. And this correlation between the choice to defer repayment and the size of the company increases linearly with size (Graph G4).
This less marked preference for deferral by smaller companies may be related to a desire to smooth out the repayment over time. We also observe that among the companies that did not repay in full in 2021 and chose not to postpone repayment until 2022, small firms are quicker to choose a long repayment period: more than 90% of them choose a repayment period greater than or the equivalent of 3 years compared to “only” 83% of medium-sized companies (Graph G4). Among the companies that have chosen to postpone their refunds, we find a similar schedule, but less significant differences between the sizes.
