With COVID-19 necessitating quarantines around the world, companies are experiencing unprecedented interruptions to their core business functions. The French government has responded to the crisis with a commitment to absorb the economic shock with an extensive rescue package.
Each source of aid serves as a tool in a government-backed toolbox to ease financial strain for companies and buoy employment rates. Although the French government has acted with urgency, some of the details of these initiatives will continue to evolve.
Please note, the following information is meant to serve as a guide. Please check with official government sources (listed below) to obtain the most up-to-date and accurate information on French government support programs.
Programs at a glance:
Startups and innovative companies: solidarity fund grants, state-guaranteed loans, liquidity support plan for startups, tax deferrals, deferral of rent and utilities
Microenterprises and small businesses: solidarity fund grants, state-guaranteed loans, tax deferrals, deferral of rent and utilities
Larger companies: state-guaranteed loans, tax deferrals
What: Monthly compensation of €1,500 with the possibility of an additional lump sum of between €2,000 and €5,000 for eligible businesses
Who: Very small companies (fewer than 11 employees) or freelancers with an annual turnover of less than €1 million
Why: Offer the smallest enterprises emergency funds to offset losses
How: Inform the tax administration of your change in turnover
When: Rolling deadlines for each month’s application
The French government launched a €7 billion solidarity fund (fonds de solidarité) to support micro-enterprises, very small businesses, and freelancers with supplementary income. Eligible businesses fall into two categories: they’ve been impacted by the ban on mandatory closings or have suffered a 50% loss of their turnover in March 2020 compared to the average monthly turnover in 2019.
Eligibility
The solidarity fund applies to microbusinesses that fit the following guidelines:
Fewer than 11 employees
Incorporated before Feb. 1, 2020
Less than €1 million in 2019 turnover. For companies with no 2019 turnover, the average monthly turnover between the creation of the company and March 1, 2020 must be lower than €83,333
For some regulated industries (professions libérales), the taxable profit must be lower than €60,000 for the last financial year.
No outstanding tax or social debt owed to the government as of Dec. 31, 2019, except for businesses on settlement plans
How it works
The tax administration will pay companies that lost more than €1,500 of their monthly average revenue €1,500. Companies that have lost less than €1,500 of their monthly average revenue will benefit from a payment equivalent. The government has extended the program to include the month of April (application process will follow the same guidelines but is not yet open) and intends to maintain this measure throughout the pandemic, as it will help the most vulnerable companies pay their rent during this time.
How to apply
Owners or leaders of eligible businesses can submit an online application until April 30, 2020, for March payments by following these steps. The application includes an estimate of the decreased turnover, an affidavit, and the company’s banking information. Once the tax administration processes the application, it will pay out the income directly to applicants.
UPDATE: Additional support for restaurants, cafes, hotels, and businesses in the tourism, events, sport and cultural sectors
The Solidarity Fund has been extended beyond May for businesses in these sectors that are subject to mandatory closing after May 11. In addition, for businesses in these sectors:
The fund is extended to companies with up to 20 employees (compared to 10 initially) and a turnover up to €2 million (€1 million initially), which can benefit from up to €1500.
The limit on additional compensation granted by regional authorities has been raised to €10,000 (compared to a maximum €5,000 for other companies).
Companies in these sectors will also continue to benefit from the partial unemployment scheme (recours à l'activité partielle) under current conditions after June 1, and from an automatic exemption from social charges between March and June (companies which already paid these social charges will be automatically reimbursed).
Further details are available here.
Microbusinesses may receive additional, one-time aid of between €2,000 and €5,000 from regional authorities (the amounts differ for each region) if they are in danger of bankruptcy.
Eligibility
Here are the requirements for extra support:
Eligible for the solidarity fund
Employ at least one professional on a permanent or fixed-term contract
Unable to settle debts due within 30 days
Denied a reasonable cash loan request made to their primary banker since March 1, 2020 (receiving no reply after 10 days counts as a denial)
How to apply
Business owners can submit a request to their Regional Council between April 15 and May 31, 2020. Each application must include a description of the situation, a 30-day cash flow plan that illustrates the financial risk of not receiving additional aid, as well as details pertaining to the denied loan request, including the contact information of the bank.
What: Loans for French business backed by the government
Who: Companies of any size, excluding a few notable industries
Why: To ease cash flow concerns for businesses experiencing a drop in revenue
How: Apply for a loan at your bank. Then request and submit a certificate from Bpifrance to your bank to receive the loan
When: Dec. 31, 2020 deadline
In partnership with the public investment bank Bpifrance and the French Banking Federation, the government has launched a scheme to guarantee up to €300 billion in Prêts garantis par l'Etat (PGE) loans. This scheme encourages credit institutions to lend money to any business or company with limited risk, as the government guarantees up to 90% of the loan to the bank in the event of a default. Financial companies, such as neo-banks, that don’t have approval to make loans cannot participate in the scheme.
Eligibility
Financing companies or credit institutions, civil real estate companies, or companies that have filed for insolvency are not eligible to apply for PGE loans. Other than these exceptions, any sized company can request a loan (or multiple loans) from their normal banker that accounts for a maximum total of 25% of 2019 turnover. The commercial loans are given at cost price (close to zero euros), with an additional fee to cover the cost of the state guarantee that depends on the size of the enterprise.
Publicly traded companies need to make two commitments to be eligible for PGE loans: not to pay dividends in 2020 to shareholders in France or abroad and not buy back shares in 2020.
How it works
Businesses can repay the bank with a one-time repayment at the end of the first year of the loan, or they can pay it off over 5 additional years. The state guarantees a percentage of the commercial bank’s loan, meaning that the bank is partially reimbursed if the borrower defaults. The bank cannot request security from the business over personal or commercial assets.
Here are the conditions, terms and application processes for different-sized companies in France:
| Company size |
< 250 employees + < €50 million turnover |
< 5,000 employees + < €1.5 billion in turnover |
> 5,000 employees or > €1.5 billion in turnover |
| Level of guarantee | 90% | 90% | 70-80% |
| Interest rates |
Year 1: 0.25% Years 2-3: 0.5% Years 4-6: 1% |
Year 1: 0.5% Years 2-3: 1% Years 4-6: 2% |
Year 1: 0.5% Years 2-3: 1% Years 4-6: 2% |
Loan limit exceptions for startups and ‘innovative’ companies
By definition, “innovative companies” are businesses that have received public support for innovation (in particular individual aid from BpiFrance), raised funds from French or foreign investors (primarily through VC funds), or have been supported by a private or public incubator.
These companies benefit from a guarantee and interest rate that correlates with the size of the company. However, both startups founded on or after Jan. 1, 2019, and all innovative companies can request a loan for two years of their payroll rather than 25% of their turnover. This stipulation helps growing businesses (that may not yet be profitable) boost their cash flow.
How to apply
For companies with fewer than 5,000 employees, these are the steps for loan approval:
Reach out to a banking partner and ask for pre-approval based on your eligibility standards.
Request a certificate from Bpifrance.
Share this certificate with your bank, which will then approve the loan.
If small businesses have an issue with their bank the business leader can reach out to BPI France through a dedicated contact (supportentrepriseattestation-pge@bpifrance.fr) or to the credit mediator for a solution.
Companies with 5,000 employees and more than €1.5 billion in turnover need to apply for the scheme through the Directorate General of the Treasury over email.
What: A suite of measures launched by Cedric O, Minister of State for Digital Affairs, and Bpifrance
Who: Startups and innovative companies working in the tech sector
Why: To boost funding and cash flow for emerging businesses
How: A mix of bridge funding, loans and loan-payment relief
When: No deadline, as of now
We recently spoke to one of Bpifrance’s team members about the country’s liquidity support plan for startups (mesures d'urgences pour les startups). As the country’s tech scene continues to grow, Bpifrance is protecting new and innovative companies.
This support plan includes additional guarantees and direct loans, as well as payment relief for pre-existing loans and bridge funding that can boost investment. Although these measures are countrywide, the application processes are managed at the regional level. If companies already have an existing relationship with a business manager at the bank, they can reach out about any of these measures. If they don’t have a contact, they can reach out through this form, and a team member from their regional office will get back to them.
Support in seeking PGE credit from commercial banks
The best first step for startups seeking loans is to approach their commercial bank through the general state-guaranteed loan program (PGE). The scheme has the highest level of capital available, and the cost of the state guarantee is lower than a Bpifrance guarantee. If a company is struggling to get approved for a PGE loan, it can request assistance from Bpifrance through email, which can make it easier to get a line of credit approved.
Direct loans for startups from Bpifrance
Bpifrance also offers companies direct loans through a €2 billion program called Prêt Soutien Innovation (PSI) dedicated to startups. This program, based on the same conditions as the state-guaranteed loans granted by commercial banks, aims to complement rather than replace the PGE loans. Because startups don’t always function like traditional companies, it can be difficult for them to receive commercial loans.
A company is eligible for a PSI loan if it fulfills one of the following conditions:
Received public support for innovation in the last five years
Raised funds from French or foreign investors in the last five years
Benefited from the support of a public or private incubator.
Bpifrance won’t take into account the startup’s prior debt and will consider companies with negative equity on a case-by-case basis. All loans are a minimum of €50,000, and the upward limit of PSI loans are the same as the other government loans: 25% of 2019 turnover, two years of payroll (and for new companies without 2 years in business, the average monthly payroll times 24).
If commercial banks won’t lend for the maximum amount through the PGE program, startups can piece together the funding they need through an additional PSI loan. Companies that have already received loans from Bpifrance won’t have to make payments for the next six months, as of March 16, 2020.
Access to Bpifrance guarantees for commercial loans
In addition to the government-backed guarantee and to direct loans, Bpifrance has historically offered guarantees for startups and innovative companies seeking commercial loans. Bpifrance raised the existing guarantee to 90%, and named it Renforcement de la Trésorerie - Coronavirus.
A commercial bank can request a guarantee from BPI for a bank loan of 2 to 7 years for SMEs and ETIs (any business with fewer than 999 employees and a turnover of less than €1,5 billion). The only additional criteria for the Bpifrance guarantee: the startup must be more than 3 years old and has raised twice the share capital of their accumulated losses.
These Bpifrance guarantees can give companies access to additional commercial loans beyond what they receive from the PGE program. They’re intended to complement, rather than replace government-guaranteed loans, for companies that require additional financial support.
Matched VC funding for existing portfolio companies
The French tech bridge launched the week of April 13, 2020, and will serve as a short-term refinancing scheme for startups and innovative companies. Specifically, Bpifrance has committed to co-investing on new rounds of funding for any startup under 8 years old, which loosens the eligibility terms of a pre-existing program. The financing ranges from €100,000 to €5 million.
Investments below €500,000 will take the form of convertible bonds with a 2-year maturity date. For funding between €500,000 and €5 million, the bonds will mature over 18 months.
This facet of the support plan encourages venture capital funds to increase investment in their current portfolio by match funding on a one-to-one basis. Eligible companies must have never received funding from the state or Bpifrance, must be younger than 8 years old, and have raised capital or support from private funds or incubators.
What: Partial or full reimbursement for wages paid to company employees
Who: Businesses that have temporarily limited or suspended their employees’ work due to COVID-19
Why: To guarantee employment for professionals and financial support for companies experiencing unprecedented financial strain
How: Submit an application online to the Ministry of Labour
When: The program is open until Dec. 31, 2020
If businesses opt into the partial unemployment scheme (recours à l'activité partielle), the state will reimburse them for the majority of their employees’ wages while their contracts are suspended. When the crisis is over, businesses can begin work again immediately without needing to rehire or retrain a team. Any company that is experiencing financial strain and would otherwise have to furlough staff would benefit from leveraging the scheme to limit layoffs.
How it works
In the partial unemployment scheme, employees receive 84% of their net salary. The exception: employees who make a minimum wage or less, who are compensated at 100%.
Businesses are only eligible for reimbursement for the hours their employees are not working, up to 35 hours per week or the number of hours listed in the employee’s contract.
Currently, companies can only receive reimbursement for 1,607 hours of work per year per employee.
The company will be fully reimbursed by the government for salaries up to €6,927 (gross) per month, which is 4.5 times the minimum wage. Use this calculator to estimate the payment made to employees, as well as the government’s reimbursement.
How to apply
Companies can submit an application online for the partial unemployment scheme. They have up to 30 days from the day they place employees in partial employment to submit the application online with retroactive effect.
The application includes the reasons why the company needs to leverage the partial unemployment scheme, the anticipated period of partial or underemployment, and details on team members experiencing partial unemployment.
In a change of protocol, the new scheme also gives companies up to two months after submitting an application to the Ministry of Labour to inform and consult the Economic and Social Committee of their request.
What: No-penalty business tax deferrals for company
Who: Any company based in France
Why: To help ease cash-flow challenges for companies under strain
How: Declare deferrals on tax administration's website and the URSSAF website
When: Within four days of the corresponding tax filing deadline
The government has implemented a 3-month corporate tax deferral (report des charges fiscales et sociales) for the March 15 deadline. These measures are not tax exemptions; they are tax deferments that still need to be paid in full. Although the French government will not pursue new tax audits or procedures during the crisis, they have not delayed the French tax return filing date. Indirect taxes, including VAT and excise tax, cannot be deferred.
How it works
Employers can defer corporate tax, as well as social tax, monthly payroll and business tax for March and April with no penalty charges. Companies with a turnover above €500,000 can also defer their value added contributions (CVAE). The earlier companies declare both reimbursements and deferrals, the better.
How to apply
Business leaders can declare any deferrals on the tax administration's website. Companies that have already paid their March taxes can request a reimbursement through the website, as well. Postpone payment of their social taxes by declaring the deferral by phone or on the URSSAF website.
What: Early refunds of corporate tax credits (e.g. CIR)
Who: Small and medium-sized enterprises, new companies, innovative startups (JEI), companies in danger of liquidation
Why: To increase immediate cash flow for companies in need
How: Apply at your professional page with an application (form n°2573) and the justification of the tax credit (declaration n°2069-RCI)
When: No time limit
France’s Budget Ministry allows companies to apply for early repayment of their corporate tax credits (remboursement accéléré des crédits d'impôts) before they file their income tax return for 2019. Small and medium sized enterprises, new companies (within 5 years of incorporation), innovative startups (JEI) and companies in danger of liquidation are also eligible for early VAT credits, as well as research and development credits.
How to apply
To benefit from early tax refunds, companies must fill out an application for a refund, explain why they need the funds early in detail, and include a profit or loss statement or corporate tax balance statement.
What: Deferral of utilities and rent for businesses under financial strain
Who: Very small companies (fewer than 11 employees) or freelancers with an annual turnover of less than €1 million
Why: Ensure the longevity of the most vulnerable businesses
How: Reach out to utility companies and landlords
When: No deadlines
Small businesses and freelancers that fit the eligibility requirements for the solidarity fund benefit from the right to defer utilities payments and rent.
How it works
Eligible businesses can forgo paying the rent, water, electricity, and gas bills for their commercial premises during the confinement period and up to 2 months after that date (July 11, 2020).
Companies that have experienced a significant drop in revenue during the crisis but are not eligible for the solidarity fund can still apply for rent deferrals, which landlords will assess on a case-by-case basis. When the crisis is over, companies can defer payment or spread out their contributions over time without interest or accompanying penalties.
How to apply
To postpone payment for water, electricity, or gas bills, companies can request a deferral—which companies must uphold by law—from their suppliers by email or phone. Reach out to your landlord to defer rent payments.