French Government Covid-19 funding measures – what is available to Fintechs?

As a global firm we have actively tracking and assessing the varied measures which have been made available by governments across the world to support corporates and businesses in response to the Covid-19 pandemic. Building on this work this is the sixth in a series of posts focusing on key Fintech jurisdictions: assessing what funding measures could be available specifically to Fintechs in France (from SMEs to start-ups). 

Whilst there are no measures directly addressed to fintech companies, they may benefit from a range of support measures implemented by the French government in favour of start-ups and other companies.

Specific support programme for start-ups

French Tech Bridge

A 80 million euros budget, financed by the Investments for the Future Program (PIA) and managed by Bpifrance (a State-owned investment bank), is intended to finance bridges between two fundraisers for start-up companies that were in the process of raising funds, or about to raise them in the coming months and who are unable to do so due to the contraction of venture capital.

This financing, which can range from EUR 100,000 to 5 million takes the form of convertible bonds with possible access to capital which must be to be co-financed by private investors.

Conditions of eligibility for the borrower:

  • the start-up must have been active for less than 8 years;
  • neither the State nor Bpifrance must be present in the capital of the start-up; and
  • the start-up must be an “innovative” company;

Equity and quasi-equity intervention is possible on tickets between 100 k € and 5M €. In total, with leverage, the French Tech Bridge will mobilize 160 million euros in equity for French start-ups.

Accelerated payment of PIA innovation aid already allocated but not yet paid out, for an estimated total amount of €250 million.

At the request of the State, Bpifrance and Ademe automatically accelerate the payment of PIA innovation aid, such as innovation competitions, by paying in advance the instalments not yet distributed for applications that have already been validated. In addition, for companies receiving aid in the form of repayment advances or accompanied by fees, the next repayment deadlines are postponed for up to 6 months.

It should be noted that the State will maintain, through Bpifrance, its support for innovative companies, with nearly €1.3 billion in innovation aid planned for 2020 (grants, repayable advances, loans, etc.). Bpifrance will also continue its direct and fund-of-funds investments alongside private investors.

Accelerated reimbursement by the State of corporate tax credits that can be returned in 2020, including the research tax credit (CIR) for 2019, and VAT credits

All companies have the possibility to apply for an early refund of corporate tax claims refundable in 2020 and an accelerated processing of VAT credit refund claims by the Directorate General of Public Finance (DGFiP). Start-ups as SMEs and/or Young Innovative Enterprises (YIEs) are eligible for immediate refund of the ETC. They can therefore apply now and without waiting for the filing of the income tax return ("liasse fiscale") for a refund of the CIR for the year 2019, which corresponds to a cash advance of around EUR 1.5 billion. The corporate tax services (SIE) are mobilising to process companies' refund requests as quickly as possible, within a few days.

Specific support for small business

In addition to its assistance to start-ups, the State also supports SMEs and small mid-caps, the FRPME (SME Reinforcement Fund), subscribed by Bpifrance Participations and the Investments for the Future Program (piloted by the General Secretariat for Investment), aims to intervene in SMEs or small mid-cap companies, industrial or services, achieving at least 5 million euros in turnover.  The FRPME will intervene, between 0.5 and 5 million euros, in development capital mainly in the form of Bonds to Share Subscription Warrants (OBSA) on financing operations of Need in working capital (BFR) and strengthening or restructuring of the balance sheet.

Other measures such as the intervention of the SME Reinforcement Fund (FRPME) in the capital of PME and ETI via bonds with share subscription warrants (OBSA), the accelerated reimbursement of tax credits on companies that can be returned in 2020 (e.g. CIR, VAT credits) or the accelerated payment of innovation aid awarded are open to start-ups but are not the subject of further developments in this post.

Support for all companies

The French government has set up a wide range of public support measures to mitigate the impact of the Covid-19 outbreak. These measures which essentially aimed at preserving the companies’ liquidity throughout the crisis encompass notably tax and social measures (deferral and/or rebates of tax and social contributions), short-time work measures and financial support schemes (including in particular the French State guaranteed loan (“PGE”) scheme, the Coronavirus guarantee scheme of confirmed short-term lines and the Coronavirus guarantee scheme to reinforce cash position (the “BPI Guarantees Schemes” and the direct lending “Priority Loan” scheme from Bpifrance).

These measures are available to a wide range of companies, including Fintechs1, provided that they comply with the relevant eligibility criteria.

For further information please refer to our Guide setting out the emergency measures decided by the French government 

1. Subject to specific exceptions (e.g. any Fintech which qualifies as credit institution or financing company will be excluded from the PGE scheme and any Fintech which qualifies as a financial intermediary will be excluded from the direct lending “Priority Loan” scheme).