A popular savings fund to support SMEs affected by COVID-19

April 09, 2020

A few days ago, Professor Georges Hübner, co-founder of Gambit, Birdee‘s parent company, proposed setting up a state participation fund to support the solvency of small and medium-sized enterprises, heavily affected by the economic effects of the health crisis. This fund would be financed by mobilising the savings surpluses held by individuals in various bank accounts.

Even if Birdee is not directly involved in this initiative, echoing it and feeding the debate seems to us to be in line with the two pillars of our mission: My money my rules, and, making money a better support for the future.

Geoffroy de Schrevel, our CEO, spoke with Prof. Hübner. 

  • Why focus on the fate of SMEs rather than that of large companies, each of which offers more employment and prospects for recovery?

Large companies have the means and the channels to apply for and obtain capital support themselves, which they have already done in most of the affected countries. They are the priority of the public authorities because their failure could directly harm the economy of their country and of the European Union. On the other hand, the fabric of SMEs does not have such an effective relay or priority by the political or economic authorities.

Individually, none of them is truly “systemic”, but together they form the lungs of our economies, and they are in no way responsible for what happens to them. Just as the health system does for individuals, we must therefore be able to offer massive, useful and supportive support to these legal entities.

Saving the SMEs that can be saved today means ensuring that our collective well-being is preserved, that we can still buy bread, play sports, maintain our streets, benefit from local services… in short, it is a collective act that citizens can and must take charge of.

  • Wouldn’t a simple gift from the State to SMEs to support their cash flow be enough?

It is important to be mindful that governments and banks have taken important steps to support the cash flow of a very large number of companies, including SMEs, and vulnerable people . Now we have to take care of their solvency, that is, their ability to support both their investment projects and the repayment of their debts over the long term.

Of course, we could pay off their debts and give them compensation, as we do for the most vulnerable people. But this would have a huge cost, borne by the state – and therefore the citizens as a whole – through debt, while the benefit would mainly accrue to shareholders.

Rather than mutualising losses and privatising profits, it is better to help companies in a responsible way, and to demand adequate remuneration for the service provided to them. The challenge is to strike a balance between an unrequited “donation” financed by the community on the one hand, and the exploitation of the distress of these companies as a “vulture fund” would do on the other. 

  • How would this work for SMEs? Would they be nationalized?

The situation should not be exploited to “flush out” shareholders of SMEs in temporary difficulty. Not only would this be unfair, but also counterproductive. Nationalising a large number of companies de facto by making the State a major shareholder would be a demotivating act for these thousands of entrepreneurs who have patiently built up a profitable activity that is useful to society.

A suitable vehicle must therefore be found. I foresee a somewhat sophisticated mechanism, but one that is understandable to businesses and acceptable to stakeholders. I advocate preference shares: they are equity capital, but without voting rights or sharing in the profits accumulated by the company. Dividends on these shares are capped, but have priority over ordinary dividends. As they are not debts, they cannot trigger bankruptcy, but they still make companies liable because they must pay for these shares before ordinary shareholders.

This system is being studied in Belgium and France. It is already being implemented in the United Kingdom and could be generalised to all economies affected by the health crisis.

  • What is in it financially AND socially for savers ?


Every saver who lets a large amount of money sit in his or her account loses money and in fact loses money to society, because that money is unproductive. The return on these accounts is lower than inflation, so savings lead to a loss of purchasing power. On the other hand, even the banks don’t want it anymore because it costs them a lot of money (they themselves invest at negative rates) and there are too many savings in relation to the demand for credit.

Of course, precautionary savings must be kept, but in many cases the amounts that remain in these accounts on a long-term basis are obviously too large to be just precautionary.

A lot of people don’t do that because they’re afraid to put their capital at risk, and we need to help them allocate their resources properly; a lot of people don’t do that because they don’t make sense of the investments they’re being offered. Birdee is trying to address both of those things, but my proposal goes a step further.

Indeed, I am convinced that the prospect of helping society as a whole, by strengthening its local business fabric, in the face of a crisis that strikes blindly, is a mobilising, exciting and meaningful project.

We must realise that we are not all equal in the face of the Covid-19 crisis. Alongside all those who see their income or resources diminish, others are not affected by these losses, and on the contrary they see their costs decrease and their savings increase. They cannot do anything about it, they have not asked for this, but one can imagine that it creates a feeling of discomfort, even frustration: these people would like to show solidarity, but do not see concretely how to do so. Investing their savings in a fund – one way or another, the details are yet to be defined – that would help companies without squeezing them like lemons, in a responsible and proportionate way, that is an inspiring project. If it were proposed to me, I would certainly support it. I sincerely hope it will be proposed to me …

Finally, if we believe in our economy, we must have confidence in its ability to recover. Therefore, the SME support mechanism should reasonably generate a surplus, at least in the medium term. The icing on the cake is that we can anticipate that the mechanism to support businesses will generate positive returns.

My proposal is to set up a capital-guaranteed investment vehicle that would distribute positive returns to investors. In other words, from a financial point of view, it seems to me perfectly possible to offer individuals a financial investment that does at least as well as the savings account: guaranteeing the return of capital, and offering returns that are at least not negative.

There is therefore a moral, social and financial interest in creating the instrument I am proposing. But our political staff still needs to agree to play this game. To date, this seems to me to be the main danger of the mechanism: that it will not be implemented due to a lack of political will or petty squabbles. What a waste that would be!

  • How much are you talking about? What proportion of individual savings would have to be mobilized for the operation to be effective?

There are about 280 billion Euros sleeping on the savings accounts of Belgians. The big institutional investors themselves are crying out for low-risk investments with positive or even zero returns – they currently have to invest at negative rates. We are talking about a fund that would invest a sum of 10 billion euros. Not even 4% of Belgian savings. The ‘Leterme’ loan, in 2011, raised around 5 billion. Today, for a meaningful and truly solidarity-based project, this amount can be multiplied. Let’s go for it…