French lawmakers approved a plan to spur the economic recovery using government guarantees to accelerate the flow of cash to companies.
The latest crisis tool will allow a company to get payment for new orders before it delivers or even issues a bill to a customer. The financing will be in the form of a state-guaranteed loan, a move that will advance cash flow by around 45 days on average, according to the government.
“This is an innovative response to help businesses in the period of picking up activity,” Finance Minister Bruno Le Maire said.
France, like other European countries, is rapidly reinventing financial rules in an effort to help companies struggling to restart operations after the lockdown. The success or failure of such tools will be crucial in determining how quickly economies can recover and start creating jobs again.
While recent indicators have pointed to a faster than expected upturn in activity, the French government still expects the economy to take two years to return to 2019 levels of output.
The new tool for financing orders will be available from the summer, pending final approval by the parliament and the European Commission. The guarantee will be available for orders until the end of 2020.
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