Before applying for aid, SMEs must ensure that they are eligible

Before applying for aid, SMEs must ensure that they are eligible

The subject of public aid to businesses is vast. Recent crises and “whatever it takes” have made it a key resource for many SMEs. If it is a mistake not to study the possibilities they offer, it is nevertheless necessary to master their mechanisms and subtleties in order to be in a process of value creation and make them fully play their role of accelerating activity.

A very rich pool of aid in France

What are we talking about ? State aid can be categorized into three main groups: tax credits (the best known being the CIR and the CII); the aid paid by the Regions and by Bpifrance, which is essentially conditional cash advances or loans and insurance; and state-guaranteed loan schemes, including the famous PGE set up during the Covid crisis.

Among these aids, there are specific schemes, for companies in difficulty or for start-ups, for example. More recently, there has also been temporary aid – let us recall in this respect the various “whatever the cost” measures linked to the confinements and the health crisis of 2020, including the solidarity fund which is still active in this beginning of 2022 for certain sectors. The 2021 France Relance plan also provides for a number of tools.

Public aid is finally quite numerous and helps to support the company in its investments, innovation or international development in mind.

The key to the success of using public aid: working on your balance sheet

However, a business leader must remain vigilant on a particularly critical point: his balance sheet and his cash flow plan. Too many entrepreneurs apply for state aid without either having anticipated a sufficient level of equity or having equipped themselves with a robust and reliable cash flow plan. However, to benefit from aid, the State asks for guarantees. For Bpifrance, for example, the aid is paid, among other criteria, on the condition of having half of the amount requested in equity.

Any seasoned entrepreneur will tell you: aid is there to improve cash flow in order to accelerate growth (for example, exploring a new field of activity or moving from phase A to phase B of a strategic). They are not there to guarantee the success of the company.

Leverage alternative or complementary models and processes

An entrepreneur often realizes too late that he is not eligible with regard to his balance sheet structure. If he wants to be eligible, he must therefore rework the structure of his balance sheet before applying for aid.

For this, increasing turnover and reducing costs is one way. However, it is clear that in many situations, this is not enough. One of the solutions is then to rethink its processes, to introduce a break, to define alternative or complementary models. For example, by developing derivative solutions with short sales cycles that bring in more and faster in order to generate a sufficient margin, with a noticeable short-term impact on the balance sheet situation. Another option: rather than developing your own R&D with uncertain obtaining of the CIR or CII, opt for outsourced R&D.

If, despite everything, the entrepreneur is unable to adapt his accounting situation, he can rely on an extra-financial expert or a peer who, having already done so, will be able to guide him in the initiatives to be launched to restore the situation and display an appropriate balance sheet. Based on his experience, he will be able to help identify breaks and processes (commercial, R&D, etc.) allowing the target balance sheet to be reached.

Ultimately, a business leader should not wait to find out if he is eligible for public aid. He must take the lead, select the aid that would be useful to him to accelerate his development, then work on his balance sheet to have a 100% chance of obtaining them. By making responsible management decisions, he will not only benefit from them but also be able to ensure that they play their full role as an accelerator in the execution of the growth plan.