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France to direct loans of up 100 million euros to small firms

PARIS (Reuters) - The French government will make up to 100 million euros ($118 million) in loans available to help shore up the finances of small firms cut off from bank credit, the Finance Ministry said on Tuesday.

The government has already guaranteed over 120 billion euros in bank loans to avert a wave of bankruptcies triggered by the coronavirus outbreak, but some firms’ balance sheets remain weak or are unable to benefit from such guarantees.

Under a new programme starting on Thursday, firms with up to 10 employees will be able to borrow up to 20,000 euros and those with up to 49 will be able to get 50,000 euros. Loans of 100,000 euros could be made on a case-by-case basis.

With a maximum maturity of seven years, the loans will carry an interest rate of 3.5% and be subordinate to other debt in terms of repayment should the company go bust.

Although available to all sectors, hotels and restaurants are in particular expected to seek the new loans, a Finance Ministry source said.

The loans target small firms which have been turned down by their banks or for which state-guaranteed loans have not covered their financing needs.

The government is also making separate preparations to guarantee 2 billion euros out of up to 20 billion euros in quasi-equity bank loans to small firms.

Reporting by Leigh Thomas; Editing by Giles Elgood

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