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French SME solidarity fund

Eligibility conditions and practical information on the French solidarity fund for SMEs.

24 April 2020

Publication

This article is subject to possible update / modifications with regard to the publication of a possible amending decree.

Pursuant Article 11, I, 1°, a) of Law No. 2020-290 dated 23 March 2020 relating to emergency measures to handle the COVID-19 epidemic, the Government has been empowered to take all measures for direct or indirect aid to such persons [natural and legal persons] whose sustainability is still questioned, in particular by setting up measures to support their cash flow and a fund whose financing will be shared with the regions, the authorities covered by article 74 of the Constitution, New Caledonia and any other territorial authority or voluntary public establishment.

The French government has adopted the ordinance n°2020-317 dated 25 mars 2020, published in the Journal Officiel on 26 March 2020, establishing a solidarity fund for companies particularly affected by the economic, financial and social consequences of the spread of the COVID-19 epidemic and the measures taken to limit that spread. Since then, the framework of this ordinance has been clarified by decrees n°2020-371 of 20 March 2020 and n°2020-433 of 16 April 2020, amending the aforementioned decree.

Below is a deciphering of the beneficiaries and of the implementation of this solidarity fund.

Beneficiaries of the solidarity fund:

VSEs, self-employed, micro-entrepreneurs and liberal professions, with an economic activity and that are French tax residents, with:

  • 10 or less employees;
  • A turnover of less than EUR 1 million for the last financial year for which the accounts have been closed. For those who have not yet closed a financial year, the average monthly turnover for the time period between the date of creation of the company and 29 February 2020 must be less than EUR 83,333; and
  • An annual taxable profit of less than EUR 60,000 for the last financial year for which the accounts have been closed. For companies that have not yet closed a financial year, the taxable income plus, if applicable, the sums paid to the manager is established, under their responsibility, as of 29 February 2020, over their operating period and reduced to twelve months.

Activity started after 1st February 2020.

The following are also eligible:

  • Companies subject to safeguard (procédure de sauvegarde) or receivership proceedings (redressement judiciaire); it should be noted that companies subject to preventive proceedings (mandat ad hoc or conciliation proceedings) do not seem to be excluded;

  • Non-controlled legal entity;

  • Farmers who are members of a joint farming group (groupement agricole d’exploitation en commun (GAEC)) also benefit from the solidarity fund;

  • Natural persons or, in the case of legal persons, their majority manager, who do not hold, as of 1 March 2020, a full-time employment contract or an old-age pension and have not received, between 1 March 2020 and 31 March 2020, daily social security allowances exceeding EUR 800;

  • When they control one or more commercial companies, within the meaning of Article L.233-3 of the French Commercial Code, the sum of the employees, turnover and profits of the related entities comply with the thresholds set out above.

Exclusion

  • VSEs, self-employed, micro-entrepreneurs and liberal professions who started their activity after 1 February 2020;

  • Companies subject to judicial liquidation as of 1 March 2020.

Conditions for the granting of the solidarity fund

For the time period between 1 March 2020 and 31 March 2020:

  • Having been banned from receiving public between 1 March 2020 and 31 March 2020 (even if the company maintains an activity such as take-away sales, delivery and withdrawal of orders); or

  • Having suffered a loss of turnover of at least 50% during the time period between 1 March 2020 and 31 March 2020, calculated as follows:

    • For companies existing on 1 March 2019: in comparison with the turnover for the same period during the previous year;
    • For companies created after 1 March 2019: in comparison with the average monthly turnover between the date of creation and 29 February 2020;
    • For natural persons having benefited from a sick leave, work accident or maternity between 1 March 2019 and 31 March 2019, or for legal persons whose manager has benefited from such leave during this time period: in comparison with the average monthly turnover between 1st April 2019 and 29 February 2020.

For the time period between 1 April 2020 and 30 April 2020:

  • Having been banned from receiving the public between 1 March 2020 and 30 April 2020 (even if the company maintains an activity such as take-away sales, delivery and withdrawal of orders); or
  • Having suffered a loss of turnover of at least 50% during the time period between 1 April 2020 and 30 April 2020, calculated as follows:
    • For companies existing on 1st March 2019: in comparison with the turnover for April 2019, or, at the company's choice, with the average monthly turnover for the year 2019,
    • For companies created after 1 April 2019: in comparison with the average monthly turnover between the date of creation and 29 February 2020.

In addition:

  • Taxable profit must not exceed, for the last financial year for which the accounts have been closed:
    • For sole traders, EUR 60,000. This amount is doubled if the spouse of the business owner has a regular professional activity within the business entity under the status of collaborating spouse;
    • For companies, EUR 60,000 per partner and collaborating spouse.

Operational mechanism of the solidarity fund

Any company meeting the aforementioned conditions will be eligible for a tax-free aid up to a maximum of EUR 1,500. This aid is intended to cover the loss of turnover; the amount of the aid will thus be equivalent to the declared loss of turnover for March and April 2020, up to a limit of EUR 1,500.

This sum is exempt from seizure, subject to irregularities, lack of response or incomplete response in relation to the declaratory elements attached to the request.

Steps to benefit from the solidarity fund

For the aid covering the time period between 1 March 2020 and 31 March 2020:

As of 3 April 2020: all companies eligible for aid for the month of March 2020 can apply on impots.gouv.fr

  • The request can be made no later than 30 April 2020.
    • The deadline is extended until 15 May 2020 for artist-authors, associates of GAECs and companies located in Saint-Barthélemy, Saint-Martin, Saint-Pierre-et-Miquelon, Wallis-et-Futuna, French Polynesia and New Caledonia.

For the aid covering the time period between 1 April 2020 and 30 April 2020:

From 1 May 2020: all companies eligible for aid for the month of April 2020 can apply on impots.gouv.fr

  • The request can be made no later than 31 May 2020.

Control of the beneficiaries of the solidarity fund

The ordinance n°2020-460 dated 22 April 2020 on several measures taken to deal with Covid-19 epidemic responds in particular to the purpose of ensuring the appropriateness of the corresponding public spending by specifying the procedures for monitoring the beneficiaries of aid by DGFiP agents, including the procedures for verifying that the sums paid out are indeed apprehended by the beneficiary company.

Thus :

  • Obligation for the beneficiary to keep for five (5) years the documents proving his eligibility to the fund and the calculation of the amount of the aid;
  • At the request of the DGFiP, communication by the beneficiary of any document relating to his activity, in particular administrative or accounting documents, enabling him to prove his eligibility and the correct amount of the aid received for five years from the date of its payment. From the date of this request, the beneficiary has a period of one (1) month in which to produce these justifications;
  • In the event of irregularities, no response or an incomplete response, the sums unduly received shall be recovered pursuant the rules and procedures applicable to non-tax and non-field claims.

Additional aid

In addition to the aid provided under the solidarity fund, additional aid may be granted where the abovementioned companies:

  • Have already benefited from aid under the solidarity fund;
  • As of 1 March 2020, employ at least one employee on a fixed-term or permanent contract;
  • Record a negative balance between their available assets and their debts due within thirty (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 request for a liquidity loan of a reasonable amount, made since 1 March 2020, from a bank of which they were clients or have remained without response after a period of ten (10) days.

The amount of the aid can be:

Turnover for the last financial year for which the accounts have been closed

EUR 200,000 or less

Also for companies that have not yet closed a financial year; or
With a turnover for the last financial year for which the accounts have been closed ≥ EUR 200,000 and for which the balance between available assets and current liabilities is less than EUR 2,000

Amount of the aid

EUR 2,000

Turnover for the last financial year for which the accounts have been closed

EUR 200,000 or more and less than EUR 600,000

Amount of the aid

Amount of the balance between the available assets and the current liabilities up to EUR 3,500

Turnover for the last financial year for which the accounts have been closed

EUR 600,000 or more

Amount of the aid

Amount of the balance between the available assets and the current liabilities up to EUR 5,000

In order to benefit from this additional aid:

Practical details:

Sources:

This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.

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