The article’s aim is to present the nature of state aid in the European Union and to demonstrate practical support instruments applied in France. The Treaty establishing the European Community explicitly forbids any state aid that destroys competition, has a negative impact on economic co-operation between the Member States, or is incompatible with free market principles. Nevertheless, there are areas in which state aid seems to be indispensable. Assistance for small and medium-sized enterprises, mostly on account of their role in job creation and in maintaining social and economic balance, is considered the so-called bloc exemption, i.e. a sector which may be supported by the State. State aid may take various forms. The article presents the system of subsidies, tax exemptions and reliefs, social exemptions and reliefs, "soft" crediting, guaranties. The role of public institutions supporting the SME sector and future lines of state aid have also been pointed out.