The Bank of France published a study of 1.5 million 2025 tax returns finding that French small and medium sized enterprises and intermediate sized enterprises retained solid profit shares, controlled debt and strong cash positions, despite wide variation among firms. Activity remained weak for a second year, with turnover rising 1.5% for SMEs excluding micro enterprises and 1.2% for ISEs, well below their respective 1997-2019 averages of 4.2% and 3.6%. Repayment capacity also deteriorated, with the share of firms receiving top Bank of France ratings falling for a third consecutive year and the proportion rated very vulnerable rising for a fifth. Lower rates on new bank lending reached firms’ overall debt costs unevenly. SMEs’ apparent cost of debt rose slightly because their predominantly fixed rate debt repriced slowly, although 44% recorded a decline, up from 32% in 2024. ISEs benefited more quickly from monetary easing, with 67% reporting lower debt costs and their interest expenses falling from 13% to 10% of value added. Median cash holdings remained above pre-COVID levels for all firm sizes, despite declining in 2025 to 50 days of turnover for SMEs excluding micro enterprises and 52 days for ISEs.
2026-08-27Bank of France
Bank of France finds French SME and ISE fundamentals remained robust in 2025 despite weaker repayment capacity
The Bank of France found that French SMEs and ISEs maintained solid profits, controlled debt and strong cash positions in 2025, but activity remained weak and repayment capacity deteriorated. Lower lending rates passed through more slowly to SMEs, whose apparent debt cost rose slightly, while ISEs experienced a sharp decline.