A new generation of state-guaranteed loans will be deployed. They are intended to be adapted to the current difficulties experienced by New Caledonian businesses, from small companies to large firms. Another announcement from the State this Saturday, there will be more time to repay the capital of guaranteed loans already granted. Furthermore, the Overseas Issuance Institute provides free liquidity to banks.
In an attempt to support the cash flow of Caledonian companies during this extremely difficult period, various emergency measures have been deployed. Now, state services indicate in a press release issued this Saturday, “It is imperative to prepare a second phase, which will allow us to begin the reconstruction of the economy.” However, Paris believes, “the latter cannot be deployed without a massive restart of credit activity, the main driver of financing the New Caledonian economy.”
This is what is announced “a new package of monetary and budgetary support measures for the banking sector”. An announcement made by the General Directorate of the Treasury and the General Directorate of Overseas Territories. This will consist of:
-extend the maximum maturity of loans guaranteed by the State;
-set up a 0-rate refinancing line through the local “central bank”;
-and launch guaranteed loans for corporate debt restructuring and reconstruction.
Elements of explanation, beyond the jargon…
The ambition behind these measures is to encourage credit. In order to support this recovery dynamic, a new generation of state-guaranteed loans will be deployed. PGE “adapted to the difficulties faced by Caledonian businesses”.
They are aimed at VSEs – “very small businesses”, with fewer than ten employees – and SMEs – “small and medium-sized businesses”. But not only: “these counters will be exceptionally extended to New Caledonia ETIs, until December 31, 2026.” We are talking here about “mid-sized companies”a category beyond SMEs in size but below five thousand employees.
To access this new guaranteed loan offer, there is only one gateway: the banks. This system is intended to be as close as possible to New Caledonia and as simple as possible in its implementation.
The Overseas Guarantee Fund Management Company (Sogefom) has already been recapitalized by the State, we learn in this press release. “These guarantee lines will be made available by Sogefom from 1is July. And the guaranteed loans, marketed by the local banks in the coming days.”
The maturity of a loan is the time which separates the date on which the financing is granted, and the date on which the capital of this investment will be fully repaid. For loans guaranteed by the State which have already been granted, those based on the Covid crisis model, this duration will be extended up to six and a half years “in order to facilitate and streamline the deferral of deadlines”. A decree to this effect must be published in the official journal. It will come into force the day after its publication.
This decree will make it possible to maintain the benefit of the guarantee beyond six years, in cases where the deadline extensions granted by the banks to alleviate the cash flow of the companies concerned would lead to this limit being exceeded.
For bank debt restructurings that concern EMPs, the credit mediation service provided by the IEOM – the Overseas Issuance Institute – must be strengthened, “in order to ensure smooth processing of requests”.
From Tuesday, July 2, the IEOM is providing banks with a zero-rate liquidity line. According to the State press release, this free contribution should help support the balance sheets of local banks and support their commitment to distribute overdraft facilities to companies awaiting compensation from insurers.
Let us recall the emergency measures already deployed: the establishment of a solidarity fund for VSEs and SMEs, and the deployment of partial activity. But also a commitment by banks to offer payment extensions of three months or more to their customers.
