Participatory loan and equity: what to know in 2026

Quick answer. The participatory loan (Monetary and Financial Code, art. L313-13) is a subordinated debt, recorded in account 1675, but repaid at the lowest rank, just before shareholders. This position earns it treatment as quasi-equity: it strengthens your ratios without diluting capital. The Relance participatory loan (PPR), however, has been closed since 31 December 2023.

When a company wants to step up (an investment, growth, a heavier operating cycle), it often hits the same wall: its bank finds the balance sheet too leveraged to lend more, yet the owner does not want to bring an investor into the capital. The participatory loan sits precisely in that middle ground between debt and equity. You still have to place it correctly, not confuse it with the now closed Relance scheme, and understand how it actually works on access to credit. Here is our reading for 2026, anchored on article L313-13 of the Monetary and Financial Code, which has governed it since the law of 13 July 1978.

The participatory loan sits midway between a loan and capital, but the legal distinction matters.

Legally and in accounting terms, it is a debt. It appears on the balance sheet among loans and similar debts: the French general accounting plan records it in account 1675 (participatory loans), within class 16. You repay the principal and pay interest as on a standard loan. The nuance lies in the rank: it is a subordinated debt, repaid only after all other creditors in case of difficulty, just before the capital providers. This lowest-creditor rank is the very signature of the instrument.

It is this position that earns it treatment as quasi-equity. Mind the vocabulary: it does not become capital. The term "quasi-equity" belongs to financial analysis and the banking reading, not to company law. In your equity in the strict sense (share capital, reserves, retained earnings), the participatory loan does not appear. It strengthens the financial structure as capital would, without diluting shareholders or changing the breakdown of shares, but it remains a repayment obligation.

The participatory loan is not the only tool to strengthen the upper balance sheet. It belongs to a family, and the right choice depends on your situation. The three main quasi-equity instruments are the blocked shareholder current account, the convertible bond and the participatory loan. Alongside them, the capital increase remains the "true equity" option. Here is how these levers compare.

The practical reading is as follows. The capital increase strengthens equity durably but dilutes (unless everyone subscribes pro rata) and locks the amounts inside the company. The blocked shareholder current account is fast and flexible, but assumes the shareholders have the cash available, and the bank only recognises it as quasi-equity if it is effectively blocked over a significant period, set by the blocking agreement. The participatory loan brings an external, long resource, without drawing on the shareholders' cash or touching the capital, at the price of an interest charge and a repayment to honour.

The main asset of the participatory loan is not the resource itself, it is what it unlocks afterwards.

By strengthening quasi-equity, the participatory loan improves the ratios the bank looks at first: the debt ratio (gearing, financial debt over equity) and financial autonomy. Institutions integrate this quasi-equity into their structure analysis, which can move a file from a "too leveraged" status to a "financeable" one. The participatory loan then plays a primer role: it consolidates the balance sheet and opens the way to a complementary bank loan, in a logic close to that of the Bpifrance guarantees and the growth loan.

This leverage effect rests on two conditions. First, that the participatory loan's term be long and its rank truly subordinated, otherwise the bank will not reclassify it as quasi-equity. Second, that the repayment capacity holds across the whole consolidated debt, since the participatory loan adds to existing bank instalments. This is an analysis to run in close connection with your self-financing capacity, the only credible judge of what the company can bear.

Our view#

In financing files, we often see the participatory loan mislabelled and mispositioned. Two reflexes seem decisive to us. The first: never reason on the amount provided alone, but on the bank-side knock-on effect. A participatory loan is only worthwhile if it makes possible the credit that, without it, would have been refused. The second: check the real availability of schemes before mentioning them to a client. With the Relance PPR closed since the end of 2023, we now steer towards ordinary participatory loans, the blocked shareholder current account and other quasi-equity tools, depending on who holds the cash and the company's horizon. For asset-holding structures and groups, the trade-off also arises at the holding level, which we handle as part of a holding strategy.

You must absolutely distinguish the ordinary participatory loan from the Relance participatory loan, because the confusion is widespread.

The Relance participatory loan (PPR), launched in 2021 as part of the France Relance plan, was a temporary scheme, guaranteed by the State and distributed by banks and insurers. It offered an eight-year maturity with a four-year repayment deferral. Its distribution, first planned until 30 June 2022, was extended and then closed on 31 December 2023. Together with its bond counterpart, the scheme supported several thousand SMEs and mid-caps, for an overall envelope of several billion euros raised by private financiers under State guarantee.

You therefore should neither rely on the PPR in 2026 nor confuse it with the ordinary participatory loan, which remains fully available. This distinction matters: much online content still describes the PPR as if it were open, when it now belongs to the past. If someone offers you a "Relance participatory loan", that is a sign of outdated information.

An industrial SME owner asks us to finance a production line. The bank accepts a 300,000 euro loan, but conditions its agreement on strengthening the upper balance sheet: with equity of 150,000 euros and already 250,000 euros of financial debt, the debt ratio is judged too tight. The owner refuses the capital increase, which would force them to open the capital to a fund.

The analysis immediately rules out the Relance PPR, closed since the end of 2023. The chosen solution combines two levers: a 50,000 euro shareholder current account, blocked for three years by agreement, and a 100,000 euro ordinary participatory loan. These 150,000 euros of quasi-equity bring the debt ratio back to a level acceptable to the bank, which then releases its 300,000 euro loan. The result: the investment is financed, the capital stays intact and the breakdown of shares unchanged. The distinction between the closed PPR and the lasting participatory loan, and the combination with the blocked current account, were decisive. The figures are illustrative and do not commit your own file.

In practice#

Before using a participatory loan, here are the operational reflexes we apply.

• Draw up the full financing plan: total project amount, contribution, targeted participatory loan and bank loan expected downstream.
• Measure the participatory loan's effect on the debt ratio and financial autonomy, before and after, to check that it actually unlocks the credit.
• Verify the repayment capacity across the consolidated debt, participatory loan and bank loan combined, from the forecast self-financing capacity.
• Confirm the instrument's availability and real rank: long term, subordination clause, so that it is properly read as quasi-equity.
• Compare with the blocked shareholder current account when the shareholders have the cash, often faster to set up.
• Have the overall consistency validated as part of support in tax and financing and, if needed, an analysis of the role of the chartered accountant in the structuring.

A few pitfalls keep coming up in participatory loan files.

• Confusing quasi-equity with equity: the participatory loan remains a debt on the balance sheet (account 1675), it must be repaid. The "quasi-equity" label is a banking reading, not an accounting reality.
• Ignoring the rank: only a genuine subordination clause, over a long term, gets the loan recognised as quasi-equity by the bank. A poorly qualified loan does not produce the expected leverage.
• Oversizing the debt: the participatory loan adds to the bank loan. Combined, the repayments must stay bearable against the cash position.
• Believing the Relance PPR is still open: its distribution has been closed since 31 December 2023. Any offer presented under that name should raise a flag.
• Overlooking the blocked current account alternative: when the shareholders have the cash, it is often simpler and just as effective in the banking reading, provided it is actually blocked.
• Forgetting the variable share: some participatory loans carry remuneration indexed to results, which can raise the cost in good years. The contract must be read in detail.