PBE or when the savings of individuals come to finance their project of starting a business or taking over a business. These soft loans offer a particularly attractive lever for micro and small businesses.
Bank loans to companies (PBE): what is it exactly?
As their name suggests, commercial bank loans are loans that credit institutions (banks) make to corporations. They are backed by the savings of individuals placed on the sustainable development booklet (LDD) and the livret A. Indeed, originally, these booklets were designed to finance social housing. Today, they serve as financial support for Small and Medium Enterprises.
Good to know
- The LDD became since 1 January 2017 the LDDS or sustainable development booklet. However, this change of name does not affect the operation of this type of savings.
- The monitoring of the evolution and use of the funds collected on these books (LDDS and Livret A) is carried out by the Regulated Savings Observatory (OER). Chaired by the Governor of the Banque de France, this body is required to submit an annual report to Parliament and the Government.
The different characteristics of commercial bank loans
PBE is a source of funding that can be medium (5 to 7 years) or long term (8 to 12 years). They display many characteristics that distinguish them from other investment solutions.
Nature and object
The PBE is a resource loan (LDDS and Livret A).
It aims to meet a company’s cash flow needs or its investment needs. It is also used to finance social housing and city politics.
Amount and guarantee
The cost of a PBE corresponds to a claim having a global and certain character.
Guarantees may take the form of a pledge, mortgage or bond. But, there are also other types of guarantees that are much more advocated. This is the case of the BPI guarantee and the SACCEF guarantee (Credit Insurance Company of the Caisses d’Epargne de France). The latter is also an excellent alternative to the mortgage.
Regardless of their sector of activity, these companies can benefit from a PBE:
- SME: a company carrying out an economic activity, employing less than 250 people and with a turnover of less than 50 million euros or a balance sheet total of less than 43 million euros
- Operating SCI
- SCI heritage: In the context of a professional activity, the majority of goods that represent the heritage (more than 75%) is leased to third parties according to the market price.
Other peculiarities of PBE
- Possibility of early repayment
- Choice of repayment period: monthly, quarterly, semi-annually or annually
- Amortization of capital: It is recommended to set constant deadlines. Nevertheless, the credit institution has full discretion to define them.
LDDS and Livret A: a strict regulation of the use of funds
The sustainable development and solidarity booklet and the passbook A are tax-free and strictly regulated savings books. It is therefore the State that sets its operating procedures. Rates of pay, beneficiaries, ceiling deposits, banking institutions have no say in it. The ceiling of the livret A is thus limited to 22 950 euros per saver and that of the LDDS to 12 000 euros. According to the OER, the amounts of Livret A and LDDS amounted respectively to 263.8 billion euros and 101.9 billion euros at the end of February 2017.
Centralization of LDDS and Livret A funds
According to Article L. 221-5 of the French Monetary and Financial Code, Caisse des Dépôts et Consignations (CDC) centralises a portion of these bank books in a savings fund. Since 2016, the average centralization rate tends in principle to 65%. It should be noted however that this percentage of the sums collected by the banks and transferred to the savings fund varies according to the credit institutions. It ensures in any case the availability of resources of the savings fund, and this, at any time. These resources can then be used for multiple purposes such as financing of social housing, city policy and SMEs.
LDDS and booklet A: sources of finance for SMEs
Credit institutions have non-centralized resources available to finance individuals and businesses. Indeed, presented in the form of PBE, they are used to support the creation and development of SMEs. Proposed in the form of ecological loans to individuals, they allow them to finance energy saving work in old buildings.
To verify compliance with the employment obligations of non-centralized resources, the credit institutions distributing the LDDS and the passbook A are required to send a report every 3 months to the OER. This detailed report must specify at least:
- The total amount of deposits collected on these savings books
- The amount of non-centralized resources
- Total outstanding amount of finance granted to SMEs and microenterprises
- The cost of the new PBE issued since the previous feedback
- Total Outstanding Ecological Loans for Individuals for Energy Saving Work.