Aid in the face of inflation: how the government targets VSEs and SMEs

Energy prices how the government is trying to address bakers

Small and medium-sized businesses are once again on the front line. “Today, suppliers do not help bakers and SMEs enough. I ask them to do more, better, and immediately”, called the Minister of Economy Bruno Le Maire on Tuesday, January 3. Faced with soaring energy prices that are plaguing French companies, the government has promised to intervene. “There is no wall of bankruptcies”, thus promised the number two of the government, dismissing the hypothesis of an explosion in the number of companies which would be forced to put the key under the door.

In its latest survey published at the end of October, the Confederation of Small and Medium-Sized Enterprises suggests that 9% of managers of VSEs/SMEs “consider stopping their activity due to the rise in energy prices”. A figure that the government “contests”, indicated Bruno Le Maire. “Today, less than 1% of entrepreneurs plan to close or slow down their production,” he assured, indicating that he was basing himself on INSEE figures. “There are few truly large companies. difficulty in the face of the explosion in electricity prices, which would suddenly close or slow down their activity”, insisted the minister.

Postponement of social security contributions, personalized support, etc.

However, the executive announced at the start of the year a new burst of aid targeting VSEs and SMEs. Starting with the extension of the tariff shield on electricity and gas for VSEs (the only ones eligible for the device) until the end of 2023, as announced by Elisabeth Borne on France info on January 3. Gas prices were initially supposed to disappear in June to stick to European regulations.

On the SME side, the Prime Minister promised that they would soon have the possibility of “requesting the postponement of the payment of their taxes and social security contributions”. The requests will be examined by seeking “amicable solutions” on a case-by-case basis, said Bercy. It specifies that the deferrals “do not apply to VAT, ancillary taxes and the repayment of withholding tax”. Companies can already request a delay from Urssaf concerning current contributions, or a rescheduling of the current Covid clearance plan. A reception point will be set up “in each prefecture” by the departmental adviser on emerging from the crisisa position created in the summer of 2021 to help companies survive the crisis, to “accompany everyone according to their situation”, she also announced.

The state puts pressure on energy companies

Faced with the lack of support from energy suppliers, Elisabeth Borne also asked to allow small traders to spread their high winter energy bills over several months. The Minister of the Economy, for his part, announced that he had met with the energy companies, and obtained from them future “payment facilities” intended for “VSEs/SMEs which would have cash flow difficulties”. The minister responsible for small and medium-sized enterprises also told franceinfo that this spread could last until the summer.

The executive intends to put energy companies under pressure to force them to apply these measures. If they do not fall into line, “we can always take more from energy suppliers than what we are doing today”, also warned Bruno Le Maire, after months of heated debates around the taxation of “superprofits”. He also threatened to publicly release the names of energy suppliers who do not respect the charter concluded with the Ministry of the Economy, so that “they are known to the general public”.

The catastrophic case of bakers

For several months, the 33,000 French bakers have been particularly affected by inflation, which has caused the skyrocketing price of raw materials (eggs and flour have increased by nearly 30%), in addition to the increase in the price energy essential to their operation (some bills are multiplied by 5, or more). The profession has been crying out for disaster for weeks, and calls for demonstrations on January 23 in Paris.

Nearly 80% of them are not eligible for the tariff shield and must apply for aid targeted at very small businesses. The State has announced that it will soon send a “personalized” letter to bakers in France to encourage them to take advantage of the already existing aid, called the electricity shock absorber and the help desk for the payment of gas and electricity bills.

At the same time, bakers whose energy contract prices have exploded to the point of endangering the “survival” of their business, will be able to “terminate” these contracts, “free of charge”, in order to renegotiate new ones “more advantageous”, assured Bruno Le Maire. This “exceptional” measure, which exclusively targets bakers, will be applied “on a case-by-case basis” by energy companies, warned the Minister of the Economy.

Reimbursement of PGE could be complicated

Bakeries may not be the only ones to face increased difficulties in the coming months. While the repayment of state-guaranteed loans (PGE), granted during the Covid crisis, began for many VSEs, SMEs and ETIs (mid-sized companies) in the spring of 2022, the Interministerial Committee for Industrial Restructuring (Ciri ) de Bercy, whose task is to help companies in difficulty with at least 400 employees, notes a “significant” increase in requests for restructuring of the PGE to spread the debt.

“The situation will become more complicated in 2023 with the cost of energy” and with the resumption of legal proceedings by Urssaf for non-payment by companies of social and tax contributions, judge the credit mediator, Frédéric Visnovsky. The most affected sectors could, according to him, be construction and the hotel and catering industry.

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