EU Approves French, Portuguese State Aid Program for Small Businesses

The European Commission said on Monday it had authorized France and Portugal to provide temporary state aid of no more than 500,000 euros (about 660,000 U.S. dollars) to small businesses hard hit by the financial crisis.

In both countries, the scheme will allow state, regional or local authorities and certain public bodies to grant aid of up to 500,000 euros in 2009 and 2010 to businesses which find themselves in difficulty as a result of the current economic crisis or are experiencing financing problems because of the credit squeeze.

European Union (EU) Competition Commissioner Neelie Kroes said that the measure would give a shot in the arm to businesses affected by the current economic situation without leading to undue distortions of competition.

The scheme is based on the provisions of the temporary framework that deal with compatible aid of a limited amount. In particular, the maximum amount of aid does not exceed 500,000 euros per company and the scheme applies only to businesses which were not in difficulty on July 1, 2008 or which were not in difficulty then but became so subsequently as a result of the economic crisis.

It is the first in a series of aid measures for businesses adopted by France and Portugal to tackle the current economic crisis.

Germany was the first EU country, which came up with a similar scheme, which had been approved by the commission by the end of 2008. (1 U.S. dollar = 0.7576 euros)