In order to deal with the COVID-19 pandemic and its consequences on the French economy, immediate measures have been put in place by the French Government to support businesses. These measures are summarized here below.
1. MEASURES IMPLEMENTED BY BPI FRANCE (French public investment bank)
- 90% guarantee for 3- to 6-year loans granted by French private banks to affected companies;
- Guarantee up to 90% of the bank overdraft if the bank confirms the overdraft over a period of 12 to18 months;
- Extension of conventional guarantees for investment loans for a period of 6 months, free of charge;
- 3 to 5 years unguaranteed loans up to €5 million for SMEs and € several million for “mid-cap” companies (ETIs), with a 1 year deferral (so-called “prêt Atout”);
- Together with French regions, possibility for companies to be granted an unguaranteed loan from €10 to €300,000, subsidised over a period of 7 years with a 2-year deferral (so-called “prêt Rebond”);
- Extension for BPI clients of the invoices deadlines and granting of cash credit facility equivalent to 30% of the receivables’ amount;
- Suspension of repayments for loans granted by Bpifrance, for a duration up to 6 months;
- Readjustment upon request of medium and long-term loans for Bpifrance clients;
- Specific measures to support exporting companies:
- Strengthening state guarantees through BPI France Assurance Export for guarantees and pre-financing of export projects to secure the cash flow of exporting companies;
- Extending prospecting-insurances in progress by 1 year, allowing an extension of the prospecting period covered;
- Amplification of the "Cap Francexport" public reinsurance scheme, implemented in October 2018, with a doubling of the ceiling on outstanding amounts reinsured by the State (to €2 billion);
- Strengthening support and information by the operators of the France Export Team, in conjunction with the regions and the network of foreign trade advisers, in addition to private support players;
- Specific measures for start-ups (€4 billion, notably through a "French Tech Bridge" envelope of €80 million), SMEs and small ETIs (assistance from the SME Strengthening Fund of between €0.5 and 5 million);
- Introduction of an online application form and a toll-free number (0 969 370 240) to facilitate access to information and guide entrepreneurs.
2. MEASURES IMPLEMENTED BY THE MINISTRY OF ECONOMY AND FINANCE
- Possibility for companies facing payments difficulties to apply for a settlement plan aiming at spreading or deferring payment of tax debts;
- In the event of more serious difficulties, possibility for these companies to be granted direct taxes rebates (free of charge) on a case-by-case basis, following an individualized assessment;
- Possibility for companies to benefit from an accelerated proceedings for the refund of corporate tax claims refundable in 2020 (without waiting for the filing of the profit and loss statement), as well as from an accelerated processing of claims for VAT credits refunds;
- Deferral and possible rescheduling of rents, water, electricity and gas bills for small businesses eligible to the solidarity funds financed by the State and the Regions, for a 6-month period:
- Companies experiencing difficulties in paying their rents, water, electricity and gas bills can file a request for an amicable postponement to their water, gas or electricity supplier without delay by e-mail or telephone;
- On 20 March 2020, the main federations of malls lessors called its members to implement monthly payments for rents and charges invoiced for the second quarter;
- Prohibition on water, gas and electricity suppliers to cut off supplies in the event of non-payment; and on lessors to apply penalties, late payment interests, or to activate guarantees or deposits in the event of unpaid rent.
- Flat-rate aid of €1,500 (or, alternatively, the equivalent of the loss of turnover, if less than €1,500) for all small businesses, self-employed persons and micro-entrepreneurs and self-employed persons which have a turnover of less than €1 million and an annual taxable profit of less than €60,000 and which:
- are subject to administrative closure;
- or who experience a loss of turnover of at least 50% in March 2020, compared to March 2019.
- Possibility of an additional flat-rate aid of €2,000 and €5,000, depending on the turnover, paid by the region for firms benefiting from the first flat-rate aid (up to €1,500) and which:
- have available assets not allowing them to settle their debts due within 30 days and the amount of their fixed charges, including commercial or professional rents, due for the months of March and April 2020;
- have been refused a cash loan of a reasonable amount by their bank.
- State guarantees up to €300 billion to cover bank lines credit that businesses may need as a result of the pandemic. This cash loan will be able to cover up to 3 months of turnover or 2 years of payroll for innovative enterprises or enterprises created since January 1, 2019. The loan benefits from a State guarantee of 70 to 90%, depending on the size of the company;
- €10 billion guarantee scheme to enable companies to continue to benefit from the credit insurance cover they need in order to continue doing their activity;
- Recognition by the State and local authorities of the Coronavirus as a case of force majeure for their public contracts. Consequently, for all State and local government procurements, penalties for delays will not be applied.
3. MEASURES IMPLEMENTED BY THE TAX AUTHORITIES
- Possibility for companies to defer next direct instalments (corporate tax, payroll tax) without penalty:
=> possibility for companies, which already paid their instalments due in March 2020, to object the corresponding SEPA debit or to apply for a refund from tax authorities if the debit has been processed.
The Single Euro Payments Area (SEPA) makes it possible for consumers, businesses, traders and administrations to make payments under the same conditions throughout the European area.
- Possibility to suspend monthly contracts for the payment of business tax (CFE) or property tax ; remaining amount to be deduced from the balance, without penalty;
The CFE is the corporate property tax. It is due in each city where the company has premises and land.
- Possibility for companies experiencing financial difficulties to be granted payment delays for the payment of their tax and social security debts.
4. MEASURES IMPLEMENTED BY THE URSAFF NETWORK
URSSAF is a network of private organizations whose main task is to collect employees’ and employer’s social security contributions that finance the French social security system.
- Extension of the mechanism allowing employers to defer the payment of all or part of their employees’ and employer’s social security contributions due to URSSAF up to 3 months with no penalties, automatically for undertakings with less than 5,000 employees and on request, after assessment, for undertakings with more than 5,000 employees.
- Possible postponement of supplementary pension contributions.
5. MEASURES IMPLEMENTED BY THE MINISTRY OF LABOR
- Modification of the partial activity working scheme in order to facilitate access and reduce the amounts to be borne by employers;
- Safeguard of employment in companies through a simplified and reinforced partial activity working scheme:
- The company will pay a compensation equal to 70% of the gross salary (about 84% of the net) to its employees. Employees earning the minimum wage or less will be compensated 100%.
- The company will be fully reimbursed by the State for salaries up to €6,927 monthly, i.e. 4.5 times the French minimum wage.
- Derogations from maximum working hours and weekly/Sunday rest rules in sectors seen as particularly necessary for the security of the Nation or the continuity of economic and social life;
- Possibility for companies to force employees to take paid holidays or to modify paid holidays already taken, within the limit of 6 working days;
- In the case of collective proceedings, possible extension of the time limits for finding an amicable solution and of the recovery plan;
- Support from the AGS (Association for the Management of the Employees' Claims Guarantee Scheme) for companies experiencing difficulties:
- Exceptional arrangements for the repayment of debts owed by companies in difficulty.
- Assistance with the payment of wage advances to employees of companies affected.
- Publication of a Q&A for entrepreneurs and employees, available here.
6. MEASURES IMPLEMENTED BY THE BANQUE DE FRANCE (credit mediation) AND THE FRENCH BANKS
Banque de France (French central bank)
- Support to negotiate a deferral of bank loans with the relevant banks;
- Credit mediation to help firms that are experiencing difficulties with one or more financial institutions.
- Banks' commitment to provide state-guaranteed loans at cost;
- Introduction of fast-track credit appraisal procedures for tight cash flow situations, within 5 days and with special attention to emergency situations;
- Deferral of credit repayments for businesses for up to 6 months;
- Suppression of penalties and additional costs for deferrals and corporate credits;
- Communication and explanation of public support measures (deferral of social or fiscal deadlines, public guarantee mechanism such as BPI, etc.).
7. MEASURES IMPLEMENTED BY THE INSURERS
- The Caisse centrale de réassurance (French public reinsurance fund) will support a public reinsurance mechanism on outstanding credit insurance liabilities, up to €10 billion, intended to ensure the sustainability of inter-company credit;
- In addition, insurers have committed themselves to:
- Contribute up to €200 million to the solidarity fund which was created by the government to support companies facing a significant fall of activity;
- Defer the payment of rents for very small enterprises, small and medium-sized enterprises belonging to one of the sectors whose activity is interrupted;
- Maintain the insurance guarantees for very small enterprises experiencing payment difficulties or delays for the entire duration of the period of suspension of activity;
- Work on the implementation of an insurance product in the event of a major health catastrophe to improve the future range of insurance cover for businesses.
8. MEASURE IMPLEMENTED BY THE COUNCIL FOR THE SOCIAL PROTECTION OF SELF-EMPLOYED PERSONS (CPSTI)
The CPSTI is setting up an exceptional financial aid, corresponding to the amount of supplementary pension contributions paid by artisans and self-employed persons exercising a commercial activity on the basis of their income in 2018, up to a limit of €1,250 paid automatically to all of them who:
- are active on 15 March 2020;
- were registered before 1 January 2019.
9. MEASURES IMPLEMENTED BY ACCOUNTANTS
- Mobilization of chartered accountants to finance additional working capital needs up to €50,000;
- Setting up of a single file for financing applications that can be filled online and sent simultaneously to 3 banks.
10. MEASURES IMPLEMENTED BY THE BUSINESS MEDIATOR
- Support in dealing with a conflict with customers or suppliers.
♦ ♦ ♦
The partners of Gide's Competition & International Trade practice group are on hand to answer any questions you may have in this respect. You may also get in touch with your usual contact at the firm.
This legal update is not intended to be and should not be construed as providing legal advice. The addressee is solely liable for any use of the information contained herein and the Law Firm shall not be held responsible for any damages, direct, indirect or otherwise, arising from the use of the information by the addressee.
>> Click here to read the legal updates of Gide's multidisciplinary taskforce set up to answer all your legal issues relating to Covid-19.