AID AVAILABLE

ACCRE (I’aide aux chômeurs créateurs d’entreprises)

This is a state aid subject to case-by-case approval, or refusal, for the registered unemployed and other categories of people who can show limited means or special circumstances. Twelve months exemption from social security contributions up to a certain income level (with the exception of contributions to the complementary pension scheme) and continued payment of unemployment benefit, generally for six months and in the case of state widows’ benefit for 12 months, are the initial financial advantages for new businesses. Application forms are available from the Direction départementale de travail (see chéquiers-conseil above) and must be correctly completed and returned before registering any business. Application for ACCRE cannot be made once trading has begun. Send the application by recorded delivery or ask for a receipt if it is delivered by hand. Successful ACCRE candidates may also qualify for an EDEN loan with professional advice (see page 85).

ANVAR

As well as possible tax relief, new industrial and commercial businesses proposing innovative products or systems may qualify for a grant or interest-free loan. The national agency for research and development (ANVAR) funds up to 70 per cent of research and development costs and loans can be written off if the project fails. There are 25 regional offices. Write to ANVAR, 43, rue de Caumartin, 75436 Paris cedex 09 or visit website www.anvar.fr.

Aid from regional funds (fonds regionauxa d’aide au transfert de technologie) also exists for small new industries (PMIs) for research and technical training.

CAPE (contrat d’appui au projet d’entreprise)

Introduced by the economic initiative law in 2003 this provides a generous test period of up to three consecutive years. The period can extend over one, two or three separately agreed 12 month periods for individuals wishing to test out their business idea.

The element of initial risk is greatly reduced as the future entrepreneur is taken in hand by a company or association (couveuse) providing them with a supervised training programme geared to their project. The course is full-time and although it is not remunerated, the trainee enjoys full social security cover and can also apply for ACCRE and EDEN. The trainee also knows that they are not obliged to start a business if the test period suggests that their business idea is not going to be viable. For further details write to Union des Couveuses, 14 rue Delambre, 75014 Paris or email contact@uniondescouveuses.com.

DJA funds

These are state and European Union funds for people under 40 years of age, with previous farming experience, who are prepared to take a farm management course to help their dream of running their own farm. UK farmers with previous experience wishing to plunge into vineyards ripe for redevelopment should take note of these available funds. Contact the local Chambre d’Agriculture or visit www.adasea.net – the farmer departemental federation.

FISAC (fonds d’intervention pour les services, i’artisanat et le commerce)

This is a state grant assisting the creation of a new shop, service or artisan’s business serving a small community with a population of under 2,000. Villagers crying out for a local bar or a concentration of anglophiles wanting a pub are examples. Tourist businesses such as camping sites, hotels and restaurants are non-starters. Chambers of commerce or the DRCA (délégation régionale au commerce et à l’artisanat) should be contacted.

FRAC (fonds regionaux d’aide au conseil)

Contact the prefecture or chamber of commerce to see if this aid is available. They grant funds, up to a generous limit of around 31,000€, representing between 50 and 80 per cent of the cost of professional market surveys and business development plans if the future entrepreneur needs to have these prepared by specialists. The latter must be officially approved companies (conventionnés). Foreigners with a sound, ambitious project should take advantage of this.

Employees who want to start a business

If you are employed with a French company, employment law provides employees with two practical possibilities of investigating or putting into practice a business idea. In both cases the risk-taking factor of business creation is greatly reduced as the employee can regain their previous job if they decide after all not to become a business or remain self-employed. In practice the possibilities described below are most likely to apply to employees who have been with a large (national or multi-national) company for many years.

Le congé pour création d’entreprise

Like a sabbatical period this allows for a year off to study or start a project. Two years employment – not necessarily continuous -with the same company or group of companies is a basic condition for this congé. Unless the employer is outstandingly generous no salary will be paid during this period, and only a relatively small part of the missing salary can be accumulated by not taking the fifth week of holiday, to which employees are entitled every year, for the six years immediately preceding the congé year. Preplanning, and well in advance, and personal savings are crucial. With the possibility at some companies of working up to 220 hours a year over the legal limit of 35 hours a week it may be possible to build up extra time which can be carried forward through the years to help fund the congé year.

Bear in mind that benefits built up under the terms of an employment contract cannot be added to during this year’s absence and the employee cannot return to their company before the year is up. They can however give their employer two months’ official notice, before the period expires, if they need or wish to extend the test for another year. People who really can’t make up their minds can have another congé pour création three years after the first one!

If during this period the project looks sound or the business is performing well they will need to come to a decision three months before the year is up as their employer must have three months’ notice by recorded-delivery letter of their intention to leave the company. If, on the other hand, they wish to rejoin their company the employer must also be informed officially three months before the year is up.

Key staff may be refused the congé request in companies employing under 200 people, although this decision can be contested. The start date for the period requested may also be delayed for up to six months and there are also different quota conditions depending on whether companies employ more or less than 200 people. Managements of very small, small- and medium-sized companies (TPE, PME/PMI) will have strong arguments for refusing the request.

Temps partiel pour création d’entreprise

In many respects this part-time employment possibility is an easier solution for the employee who wants to try out his project, although their employer may find it difficult to dovetail the work of two part-time employees if another (new) part-time employee is required to make up productivity.

Employment law stipulates the same conditions as those for the congé pour création d’entreprise. The amount of part-time work requested must also be stipulated and, as with the congé pour création d’entreprise possibility, the nature of the new business project must be revealed. (Since August 2003 the law has allowed for restrictive exclusivity clauses in employment contracts, with the exception of those for salaried exclusive representatives, to be waived for these congé and temps partiel periods: provided the employee does not ruin or try to ruin his employer’s business by poaching the employer’s customers.)

If the employer accepts the request, the employment contract must be modified to show the new reduced salary, job description – if there are any changes – and exactly when the reduced hours of work will be worked. If the employer refuses the reduced hours of work request, they must explain why in their official letter notifying the decision. This decision can be contested by contacting the local industrial tribunal (conseil de prud’ hommes) within 15 days of receiving notification. NB: employees should not miss the opportunity that all salaried people have to vote every five years in the election of employers and salaried employees who make up the members of these tribunals.

Employees are paid in accordance with the reduced number of hours and cannot resume their full-time employment, if they so wish, before the year expires. They will then be paid not less than their previous salary.

Exemption from payment of social security contributions applies to an income figure up to 120 per cent of the national basic minimum salary for the first 12 months of any new business, but is subject to the following conditions and limitations:

• at least 910 hours of salaried employment during the 12 months immediately preceding the business start date; (approximately six months on the basis of a 35 hour week);
• and at least 455 hours of salaried employment (around three months) during the first 12 months immediately following this start date.

Despite the fact that 20 per cent of France’s work force are in the French civil service, administrative systems will not automatically recognise and award this entitlement. Exemption must be applied for to the appropriate social security contributions collection agency (URSSAF or other) within the 12-month period and at least 90 days after the new business start date. For further information visit www.urssaf.fr.

It is vital that the procedure laid down for notifying the employer is strictly followed. Not least to ensure that the employee effectively retains his employment status during the congé pour création d’enterprise option and can benefit from the above exemption. DDTEFP offices can supply the full official text governing the above possibilities.

Note also that if the business fails or is wound up the right to unemployment benefit as a previous salaried employee will only apply if application is made within three years of having terminated the last salaried employment contract. This highlights once again the importance of the first three years’ results in new businesses.

Unemployed people who want to start a business

To encourage new business creations the national employment agency (ANPE) offers a free consultancy service and financial advantages for the registered unemployed.

The consultancy service (EPCE (évaluation préalable à la création ou à la reprise d’entreprise)) examines the strengths and weaknesses of the project, weighs up its practicability and sets out the (theoretical) ways and means of setting up in business and achieving success by drawing up a formal plan showing what to do and when. In practice, a professional consultant discusses with the new-business candidate their personal and employment background to see if they have the necessary knowledge of their project’s market situation and the commercial, technical, management and financial aptitudes to make a go of it.

Once the business has started, if income is less than 70 per cent of previous salary on which unemployment benefit (allocations d’ASSEDIC) has been calculated, part of the difference will continue to be paid as benefit for a maximum period of 18 months. Unemployed people over 50 years old obtain better advantages.

As with salaried employees starting a business, if, despite all preparatory studies, the business fails within three years, unemployment benefit is obtained. Risk-taking is therefore reduced.

And also, as with salaried employees starting a business, the same exemption and conditions apply to social security contributions in relation to income. Periods of unemployment with paid benefit count as ‘salaried employment’ for these purposes on the basis of one day’s unemployment being equivalent to 6 hours’ salaried employment. The unemployed are obviously deemed to start their day later!

EUROPEAN UNION GRANTS

While various EU schemes exist for small- and medium-sized businesses note that applications are only received for consideration once a year before certain dates – and sometimes only every few years – and that obtaining a decision and payment of any grant is a lengthy process.

What schemes exist and how are applications made?

The European Commission manages funds which are awarded with particularly favourable consideration given to any of the following points:

• Will the project create employment?
• Does it reduce environmental pollution or improve the local environment?
• Does it help people fulfil their potential or enhance human relations through new cultural establishments (theatre groups and dance schools for example) or by providing further education or training courses (a management course linked to business English for example)?
• Does it break new research or technological ground and involve at least two EU member countries?

All projects must be truly European, by involving at least three other EU members as partners or by providing a European service which is advantageous to at least one other member country. Contact the cellule Entreprises which handles applications for France at the European Commission in Brussels.

Other grants (les aides indirectes) are managed jointly by individual member states and the European Commission, with the latter taking the final decision after an initial selection by the former. These grants come from the FEOGA (European funds for agriculture) to develop rural areas and from the FEDER (European funds for regional development) to develop regional industry.

Free advice and information are provided by the Euro Info Centre, in the Paris Chamber of Commerce, 27, avenue de Friedland, 75000 Paris. It will indicate the appropriate EU scheme for projects. For further information visit www.ccip.fr/eic.

The European Business Network based in Brussels, with offices throughout Europe, is also a useful contact. It is quite independent of the European Commission and acts as an information exchange for entrepreneurs seeking business development advice, European funds or partners. Visit the English website www.csreurope.org.

LOANS (AND CONSULTANCY)

EDEN (encouragement au développement d’entreprises nouvelles)

This state measure giving financial aid and professional advice for the ‘encouragement and development of new businesses’ will particularly interest foreigners who are going to be awarded a CAPE entitlement (see page 77) or are among the registered unemployed who are 50 years old or more. It also applies to single parents, widows receiving benefit and people with extremely limited means, and also people under 30 years old who meet certain conditions.

If awarded, it provides an interest-free loan with a maximum repayment period of five years on the following (2005) sliding scale:

• not more than 6,098€ for a sole trader;
• not more than 9,145€ if more than one applicant for the same project.

Also providing that, in both cases, a complementary loan which amounts to at least 50 per cent of the state loan is obtained from another (approved) source.

Additionally, chéques EDEN - similar to the conseils-chéquier device – are provided which are exchanged for up to 35 hours’ time with a business consultant for management, development and marketing advice etc. over the first three years. As a sensible monitoring tool an hour a month’s consultancy is logical. Approximately 60€ of the consultant’s set hourly fee (75€ in 2005) is paid by the state.

The 12–month exemption from social security payments under the ACCRE system applies. And as with ACCRE a fully and correctly completed application form must be deposited before the business starts. Contact the local DDTEFP for details of organisations that handle loan applications.

France Initiative Réseau (FIR)

The principal objective of this national association with around 250 local offices known as PFILs (plates-formes d’initiatives locales) is to obtain funds for no-interest, no-guarantee loans (prêts d’honneur) in a financial bracket ranging from as little as 1,500€ to 38,000€. Other types of loans, such as EDEN, may be obtained through PFILs which also provide advice for up to two years for new businesses. FIR is a possibility for projects, for example, that are not selected by Réseau entreprendre (see page 89) and many micro entreprises (see Taxation in Chapter 3).The very small enterprises group (TPEs) fall into this category. Write to France Initiative Réseau, 14, rue Delambre, 75014 Paris or see www.fir.asso.fr.

ADIE (association pour le droit à I’initiative économique)

This association is represented in over half of France’s départe-ments and provides low-interest loans and advice over a 24 month period for small business projects which will probably remain cottage industries (micro entreprises). Every year thousands of new businesses are thankful to them. Difficult financial circumstances need to be shown. People who for one legitimate reason or another have been refused bank loans can apply for small loans, up to 5,000€, provided their application is backed by a third-party guarantee (caution solidaire) for 50 per cent of the loan amount.

The ADIE loan can be combined with another loan such as EDEN so that a more substantial initial fund is available and ADIE may be able to supply small, but essential equipment on a loan basis ranging from professional hair-drying equipment for home-visit hairdressers to photographic equipment for photographers. Decisions and release of funds are quick and the association caters for a wide range of applicants: from architects just starting up, to glass-blowers and market stallholders.

Write to ADIE, 4, boulevard Poissonnière, 75009 Paris or see www.adie.org.

RACINES

These are local funds reserved exclusively for low-interest loans to enterprising women, such as boutique owners, hairdressers, etc. Write to RACINES, 8 square de la Dordogne, 75017 Paris or visit www.racines-clefe.com.

FGIF (Fonds de Garantie à L’lnitiative des Femmes)

FGIF helps enterprising women, by guaranteeing up to 70 per cent of bank loans for new businesses. The maximum amount guaranteed is 38,000€ (2005 rate) and the minimum 5,000€. This service will be provided for a fee as a percentage of the guaranteed amount. Single women, such as those who wish to be completely independent in their business affairs, or those who are fed up with not being paid the same as their male colleagues for doing the same job (teachers excepted) although by law they should be, will find this a useful incentive. This will also be of interest to women with children at school who want to organise their own work so that they are with their children during the Wednesday break from school. The funds can also be used to aid business development during the first five years. All women, regardless of age and personal employment situation, and all types of activities and business structures, including businesses operating from home, are eligible.

Apply to the Missions départementales des droits de lafemme in prefectures or write to FGIF, 10–12, rue des trois Fontanot, 92000 Nanterre.

Equal opportunity for the sexes is the law, but in practice women are excluded from certain jobs and this is one important reason why women open their own businesses. Reports concur that women are generally good at PR, cultivating good customer relationships and therefore customer loyalty. Although plenty of women and men have hairdressing salons for women in France you will almost never find a man running a perfume shop. (Interestingly, some of the best perfume creators who literally sniff out new fragrances for the latest products are men.)

Services provided at home for people, including door-to-door transport, are a big growth area and, apart from garden-maintenance, are dominated by women.

Réseau entreprendre

This is a network of 31 area associations designed to help future small- and medium-sized businesses (PME), but not businesses that intend to remain one-man bands, by awarding a no-interest, no-guarantee loan (prêt d’honneur) and by offering free consultations with a team of professional people: working or retired businessmen, bankers, legal experts, etc. These are people who can give sound advice and possibly put forward alternative proposals or modifications based on their fields of expertise.

Hand-written motivation letters accompanied by a CV accentuating employment experience and skills which relate particularly to the project should accompany a business development plan or details of the project, for initial appraisal. The project will then be filtered and discussed before a definite commitment is made to help the entrepreneur on a one-to-one consultancy basis through the start-up period and initial years. As the members of the association put up the money for the loans themselves they only accept cases where motivation and the project are outstanding. (Note that if the business does fail the outstanding loan amount is written off.)

The website details are: www.reseau-entreprendre.org. This association will only normally consider projects with projected setting-up costs (bilan de départ actif) in the 80,000 to 500,000€ bracket, and offers loans up to approximately 46,000€.

Réseau entreprendre en France

This is a federation, organised by Chambers of Commerce with supportive banks throughout France, that issues certificates of approval (Passeport Entreprendre) for new projects which satisfy their professional consultants. The Passeports are an indication to réseau member organisations that they can consider offering security for bank loans.

Contact the Espace Entreprendre in Chambers of Commerce or visit www.entreprendre-en-France.fr.

REGIONAL LOANS

Prêt régional aux créateurs d’entreprises

This regional development loan is not available in all regions and Chambers of Commerce or Trade (métiers) will have up-to-date information. Designed for new industrial and small-scale (artisanal) manufacturers, it offers a no-interest loan without any guarantee, repayable, in certain regions, over seven years. Regional authorities granting the loan will look for a good balance between personal (company) funds and existing bank loan(s), so that the regional loan will be a complementary, albeit important, source of finance. Loan brackets vary: for example, Provence, Alpes and the Côtes d’Azur region in 2005 considered loans between 15,000 and 75,000€.

This loan should not be confused with PRCE which is a regional development grant for companies under one year old who intend taking on new permanent staff. Like the regional development loan, it is only available in certain regions.

USEFUL REGIONAL AND DÉPARTEMENTAL ADDRESSES AND WEBSITES

Cantal Expansion, 16–18 rue Paul Doumer, 15015 Aurillac cedex. www.cybercantal.org

Awards annually about 50 interest free four-year loans. All new businesses are considered.

Ardab,19, rue Colson, 21000 Dijon

The Burgundy regional association for artisan industry development.

No-interest loans between 30 to 50 per cent of the investment amount are considered.

There are two useful information agents in the Franche-Comté region:

Cré-Entreprendre, ZA les prés de Vaux, 25000 Besancon

Départemental loans from 1,500 to 15,000€ which may be underwritten by the SOFARIS organisation (see also PCE loans in Chapter 6). The loan comes with ongoing advice.

Vivre en Bresse, Grande rue de la Bresse, 39230 Chaumergy Smaller interest free loans, of up to 20 per cent of the investment amount and not more than 7,500€.

Fondation Crédit mutuel, 46, rue du Port-Boyer, 44000 Nantes Interest free loans for businesses with original products and which also create local employment. They provide around 70 loans a year. The Fondation’s operating area includes the Limousin region which is increasingly popular with British property buyers. Nantes itself is considered to be one of the most attractive areas in which to live and work in France.

Fondation Crédit mutuel Océan, 34, rue Léandre-Merlet, 85000

La-roche-sur-Yon

Original business projects in the Vendee, Charente-Maritime and

Deux-Sèvres départements may be granted a 7,600€, interest free five-year loan requiring no guarantee. In comparison to the Nantes Fondation, only around ten loans are provided annually.

USEFUL VOCABULARY