In a press release dated March 15, 2020, the French Banking Federation reiterated the desire of French banks to support businesses during this exceptional period.
Information current as of the date of publication of this article.
In this context, provision is made in particular for the sympathetic consideration of requests for postponement (up to six months) of loan repayments and for the removal of penalties and additional costs of postponements of maturities and credit repayment deadlines.
The press release states that these deferrals will be granted after studying the individual situation of the company. It is therefore in the interest of companies to prepare now for the forthcoming negotiations with their banks. To do this, the company may, for example, draw up profit projections taking account of this particular context, even if these projections are likely to change, or prepare a presentation of the measures that the company intends to implement in order to react as effectively as possible to the difficulties it faces.
The postponement of bank maturities will have a positive cash flow impact for the companies that will benefit from it. However, the banks have not specified whether this deferral is applicable only to the repayment of the capital or whether it also concerns the payment of interest.
From a tax point of view, the postponement of bank maturities should not have a significant impact, as accrued interest will continue to reduce accounting and tax income.
Nevertheless, one may wonder about the impact of the crisis on the system for limiting the financial expenses of companies (or integrated groups) that will bear more than €3 million in net financial expenses during the current financial year. If their EBITDA deteriorates, the €3 million ceiling (€1 million for financial expenses relating to “undercapitalized” loans), and not the 30% EBITDA ceiling (10% of EBITDA for expenses relating to “undercapitalized” loans) will apply. Undercapitalized companies could be collateral victims of the crisis, due to the limitations on the carry forward of non-deducted financial charges that apply to them.
