How to finance your business in France

By Valérie Aston on 9 February 2010 · Viewed 20396 times · Questions

Many English speaking entrepreneurs starting a business in France think that self financing their project is the only way to get the business of the ground. It may be true if your grasp of the French language is limited, but there still are many schemes available to help you start.

Banks will in general ask you to finance at least 30% of the initial investment and are also likely to request guarantees on your professional loan.

If your overall investment is below 45,000 euros, my advice is to look at Prêt Création Entreprises (PCE) from OSEO. Your bank manager can set up this business loan via the Oseo extranet and - provided your bank has agreed to finance your main professional loan - it can be set up very quickly.

What is a Prêt Création d’Entreprise (PCE)

This small business loan, ranging between 2,000 euros to 7,000 euros is issued by OSEO, a national banking organisation, and generates a guarantee of 70% on your main business loan. PCE can only work for an overall investment of up to 45,000 euros, however OSEO also offers guarantees for higher investments.

How does it work? The PCE has to be associated with a bank business loan of at least twice its amount – so a PCE loan of 7,000 euros requires a business loan from the bank of at least 14,000 euros. OSEO issues a guarantee on your bank business loan and commits to reimbursing this loan to your bank if your business came into administration or receivership. The PCE interest rate varies on a monthly basis and was 4.15% in February 2010.

Other ways to finance your business in France

Other schemes which could help you convince the bank manager to invest in your business include:

Fonds de Garantie à l’Initiaitve des Femmes (FGIF)

Women entrepreneurs can request a guarantee from the Fonds de Garantie à l’Initiaitve des Femmes (FGIF). This national fund managed by France Active will generate a guarantee of 70% on business loan up to 38,000 euros. The maximum guarantee will be limited to 27,000€ for loans over 38 000€. The FGIF guarantee will cost you 2.5% of the guaranteed amount. In order to set up the guarantee, your project will have to be approved by a committee held by France Active. Members of these commissions usually are bank managers, accountants and business advisers, acting voluntarily on behalf of their organisation. A standard application would include a market study and a financial plan, which France Active would help you complete.

Entreprendre En France network (EEF)

Interest free loans are also available for businesses registering with the Chambre de Commerce et de L’Industrie (CCI) via their Entreprendre En France network (EEF). This network provides business advice with access to experts such as lawyers, accountants or notaires. They also have an agreement with most banks, enabling entrepreneurs to get an interest free loan ranging from 5,000 euros to 7,000 euros, depending on the bank. You will have to present your project to the EEF committee (short market research and provisional plan) and answer a few questions related to your business. Questions vary from one project to another and could be related to your estimated turnover, your stock and suppliers, your marketing strategy, etc. Get in touch with a business adviser from your Chambre du Commerce, who will brief you and help you complete the dossier.

The Chambre de Métiers has a similar initiative and provides interest free loans for artisans. Regional conventions are signed with several banks and loans may vary from 5,000 euros to 11,000 euros. Once again, get in touch with your local Chambre de Métiers to check which banks have a partnership and what is the average loan.

Nouveau dispositif d’Aide à la Création et à la Reprise d’Entreprise (NACRE)

If you are currently working on a business idea but are still registered with Pole Emploi (former ANPE), you may also benefit from NACRE - Nouveau dispositif d’Aide à la Création et à la Reprise d’Entreprise. This new scheme launched in April 2009 by the Governement, enables you to benefit from the free support of a business adviser, as well as the ability to request an interest free loan called “prêt d’autonomy” ranging from 1,000 euros to 10,000 euros (reimbursable over 5 years). Business advisors from the Boutiques de Gestion, Chambre de Commerce or Chambre de Métiers have been selected to help the unemployed start their business. According to your personal situation, they will help you complete the market research, complete your financial and provisionnal plan and assess the various help you may be entitled to. They will also help you prepare your file for the committee who will allocate the interest free loan.

You are eligible for NACRE if you:

  • Are unemployed with unemployment benefits.
  • Have been unemployed without benefits for at least six months over the past 18 months.
  • Soon to be changed to unemployed without benefits.
  • Are a single parent receiving the Allocation Parent Isole (API).
  • Are receiving the Revenu de Solidarité Active (RSA former Revenu Minimum d’Insertion RMI).
  • Are unemployed and over 50 years old.

Aide aux Chomeurs Créant ou Reprenant une Entreprise’ (ACCRE)

Finally, check whether you are entitled to the social charge exoneration ‘Aide aux Chomeurs Créant ou Reprenant une Entreprise’ (ACCRE). Under ACCRE, during your first year of business your social charges will be 25% of what you would otherwise pay. In the second year this figure rises to 50% and in the third year 75%. The eligibility for ACCRE is similar to those for NACRE listed above. The ACCRE application form is available online or at the Centre de Formalités des Entreprises and should be returned to URSSAF within 45 days of your registration. ACCRE will be extended to year 2 and 3, provided you remain within the yearly turnover limit of 32,000 euros for services and 80,000 euros for trade.

ACCRE is also applicable to auto-entrepreneurs. The social charges rate in their first year in business is divided by 4. For instance an ecommerce website selling close would pay 3% of social charges instead of 12%.

Example (ACCRE)

Now you may be thinking that sounds like a lot of paperwork to me!. Fortunately all these committees will request the same information, which usually comes down to a basic market research and a financial plan. The good news is that you can add several scheme together. For example, let say that you plan to buy a restaurant and have an overall investment of 43,000 euros.

  • Overall investment 43,000 euros
  • Your investment 20% 8,600 euros
  • PCE prêt création d’entreprise for 7,000 euros
  • EEF entreprendre en France for 5,000 euros
  • Bank loan 15,400 euros on which the PCE would generate a guarantee for 70%

You would have considerably reduced the risk for the bank, hence having more chance to secure your business loan.

Valerie Lemiere: Start Business in France

About the author: Valérie Aston

I've been helping people who want to start or already have a small business set up in France since 2009. After graduating from a Master of Business Administration (MBA) degree, I worked as a senior marketing consultant in the UK and France for various International companies. I worked as a conseillère en création d'entreprises (senior business advisor) for BGE here in France and run this independent business on a daily basis.