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Covid-19 – French measures to support start-ups

The French government is taking various actions to preserve the continuity of economic activity

14/04/2020

Due to the unprecedented health crisis hitting the country and its economic consequences for the various businesses, the French government is taking various actions to preserve the continuity of economic activity.

The digital secretary of state and the public investment bank Bpifrance have decided to join forces to specifically support French start-ups as many of such start-ups may face revenue issues and/or funding issues in the coming months.

In this context, and in addition to the general economic support plan announced by the government for French companies, the French government has decided to launch a nearly 4 billion euros dedicated plan which will benefit start-ups, providing them refinancing and liquidity measures, the purpose of which is more detailed below.

Bridge loans

French government together with the public investment bank Bpifrance have decided to dedicate a 80 million euros sum - funded by the Bpifrance’s PIA (Programme d’Investissements d’Avenir) and managed by Bpifrance - to assist start-ups which were in the process of raising new funds or were ready to start a new fund raising round.

In this context, such start-ups may ask for short term bridge loans, the amounts of which may vary between 100,000 euros and 5 million euros. The bridge loans shall be structured through the issuance of convertible bonds partly subscribed by private investors – so that the maximum amount of such bride loans may up to 160 million euros.

State guaranteed cash loans

As for other French companies and as detailed in the general economic support plan, the government is willing to grant to the start-ups liquidity support measures.

Start-ups shall be entitled to borrow as much as two years of payroll for employees based in France or 25% of annual revenue (such as other companies) in case this latter is higher. Such sums (the amount of which should reach approx. 2 billion euros) shall be lent by private banks together with Bpifrance and shall be guaranteed by the French state using the guarantee fund of 300 billion euros to secure bank loans taken out by companies in order to avoid any risk of bankruptcy.

Anticipated tax returns

Again and as for the other French companies, startups can get early repayment by the French tax authorities of refundable corporate income tax returns payable in 2020 as well as early repayments of VAT credits.

In addition, start-ups - as small companies and/or innovative entities - are entitled to immediate repayment by the French tax authorities of the 2019 research and development investments tax (crédit d’impôt recherche). Start-ups may then request such early repayment without necessarily having to wait for the filing of the annual tax returns. This represents a liquidity injection of 1,5 billion euros.

Accelerated public support payments

Bpifrance is speeding up public support payments in relation to innovation matters. In this context, Bpifrance is going to transfer 270 million euros ahead of schedule for companies already approved by the Bpifrance innovation program but not yet funded.

In addition, the companies receiving financial assistance in the form of repayment advances may ask for the postponement within a 6 months period of the repayment deadlines.


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