State-backed Financial Support for Businesses and Start Ups

April 10, 2020

On March 25, 2020, the French Government has - through the French public investment bank BPI - launched a program of State-guaranteed loans (“prêts garantis par l’Etat”) in order to help French-based businesses to restore and maintain their cash flow and financial situation in the current COVID-19 pandemic.

This program is open up to a total amount of loans equal to €300 billion and shall remain in force until 31 December 2020. To date, requests from businesses for a global amount of €31 billion of this loan have been submitted.


  • All businesses located in France may apply for State-guaranteed loan, regardless of their control (French or foreign), turnover, legal structure (companies, associations, etc.) or activity - except real estate companies (“sociétés civiles immobilières”), credit institutions and finance companies.
  • State-guaranteed loans are however not open to businesses undergoing insolvency procedures.

    However, businesses which are subject to assistance procedures (conciliationmandat ad hoc) are eligible to these loans, as well as businesses for which a plan de sauvegarde (i.e. court approved plan following a sauvegarde procedure, aimed at avoiding a company having certain difficulties from becoming insolvent) or a plan de continuation (i.e. a court approved recovery plan following insolvency proceedings) is in progress.

  • In practice, State-guaranteed loans are much likely to be granted to businesses whose financial situation was good prior to the Covid-19 pandemic outbreak and whose financial rating was either strong (fort), fair (correct) or acceptable - which, according to government papers represent 85% of potential borrowers.

Maximum amount of the State-guaranteed loan:

  • The amount of the State-guaranteed loan may not exceed a cap of 25% of the turnover (excluding VAT) of the borrower during the 2019 financial year (or the last financial year closed);
  • The cap is equal to twice the estimated annual payroll for companies created as from January 2019 or “innovative companies” i.e. companies who have received from a state entity a financial support for innovation, or have raised funds from professional investors dedicated at innovating companies, or were supported by an incubator.

Terms and Conditions of the State-guaranteed loans:

  • The State-guaranteed loan has a one-year grace period. At the end of this grace period, the borrower may, at its option, either repay the entirety of the loan or decide to amortize it over a period of up to 5 years. The loan may therefore be repaid over a maximum period of six years in total.
  • The State Guarantee covers 90% of the amount of the loan for borrowers having less than 5,000 employees and generating a turnover lower than EUR 1.5 billion, this percentage being reduced to 80% for companies which turnover ranges between EUR 1.5 and 5 billion, and 70% for other companies.
  • No guarantee or security may be required by the lending bank to cover that part of the loan which is not covered by the State guarantee.


  • Companies having less than 5,000 employees and a turnover of less than €1.5 billion in France should liaise with their usual banking partner to apply to such loan and get a pre-approval from the latter. The company will then request an identification number from the BPI (who monitors such process) and, once obtained, the bank will grant the loan.
  • With respect to the companies exceeding the above-mentioned thresholds, the process will be slightly different as, following the pre-approval of the bank, the company should send its request to the Treasury Department (“Direction Générale du Trésor”) and the State guarantee will be granted by an individual order (“arrêté”) of the French Minister of the Economy and Finance.

Emergency plan to support startups:

  • In addition to the measures mentioned above, the Government has announced on March 25, 2020 the launch of an emergency plan with specific measures to support startups:
    •  An €80 million package, financed by the “Programme d'investissements d'avenir” (PIA) and managed by BPI France, to finance bridges between two fund-raising rounds.
    • An accelerated refund by the State of corporate tax credits refundable in 2020, including the research tax credit (CIR) for the year 2019, and VAT credits.
    • An accelerated payment of the PIA innovation support grants already allocated but not yet released, for an estimated total amount of €250 million.

Foley Hoag has formed a firm-wide, multi-disciplinary task force dedicated to client matters related to the novel coronavirus (COVID-19). For more guidance on your COVID-19 issues, visit our Resource Page or contact your Foley Hoag attorney.