Given how little cash small businesses tend to keep in reserve, the speed at which banks are able to dispense government-backed emergency loans will be vital to an economy’s ability to weather Covid-19 lockdowns. In France banks are confident that they have moved more quickly than peers in the other big European economies, including Germany.
By mid-April, according to France’s state development bank, BPI, the banks had pre-approved 150,000 applications for government-guaranteed loans. Spanish development bank ICO counted 44,000 a few days earlier. By contrast, Germany’s KfW had only counted about 10,000 applications, about 9,000 of which would have gone through banks’ credit checks. British banks had approved little more than 6,000 loans, according to trade body UK Finance, and Italy’s equivalent scheme had only just launched.
France mainly stands out in terms of numbers, however, because (like Spain and Italy but unlike Germany and Britain) it has targeted the self-employed. Germany has a separate scheme of grants for them not involving the banks. Moreover, KfW may catch up with any lag to France’s volumes as it moved to guarantee 100% of loans for smaller firms after the Easter weekend.
