CHAPTER VII: Advances and loans

The advances mentioned in article L. 2336-1 may only be granted to communes and communal public establishments that can justify: – that their cash situation compromises the payment of essential and urgent expenditure; – that this situation is not due to an insufficiency of resources allocated to the definitive coverage of their expenses and in particular to a budgetary imbalance.

As an exception to the provisions of article R. 2336-1, advances may be granted to cover additional expenditure imposed during a financial year by circumstances that could not be foreseen when the revenue estimates were drawn up. In this case, the borrower undertakes to create, during the following financial year, the resources required to cover this expenditure and repay the advances.

The total amount of advances granted may not exceed the following maximum: – for municipalities: 25% of the amount of revenue entered in their operating budget; – for municipal public establishments: 35% of the amount of revenue entered in their operating budget.

Advances granted pursuant to articles R. 2336-1 to R. 2336-3 are reimbursed within a maximum of two years. The effective repayment period and the interest rate are set by the Minister of Finance.

Requests for advances must be supported by any documents required to justify the needs of the borrowing municipalities or establishments, to describe their financial situation and to establish the possibilities of repayment.

The documents mentioned in article R. 2336-5 include in particular: 1° The budget for the current financial year and the acts which have supplemented it; 2° The administrative account for the previous financial year; 3° The statement of liabilities, including the developed situation of the debt and indicating the repayment due dates ; 4° The statement of outstanding debts to be recovered and outstanding debts to be paid, drawn up…

The Minister of the Economy and Finance may delegate his powers to prefects for the allocation of advances requested by communes and communal public establishments. The prefect’s decisions are taken on the proposal of the departmental or, where applicable, regional director of public finance. The terms and limits of the delegation are set by order of the Minister of Finance.