Finland: Amendments to the Act on Support for Business Costs to enter into force soon – Application round for coronavirus-hit businesses to start before Christmas

NordenBladet — The objective of business cost support is to help companies cope with the difficult economic situation caused by the coronavirus. The support is compensation for the company’s inflexible costs and payroll costs, but it does not compensate for a fall in turnover. The support is targeted at companies whose turnover has decreased by at least 30% due to the coronavirus. A new application round will open soon with partly renewed conditions.

On 10 December 2020, the Government proposed that the President of the Republic approve the amendments to the Act on Support for Business Costs. The President is to approve the bill on 11 December 2020. The act would enter into force on 15 December 2020.The State Treasury is in charge of the application round. The State Treasury intends to start accepting applications from companies on 21 December 2020, with the application period lasting until the end of February. The State Treasury will provide information about the exact application period later.

“With business cost support, we want to help as many companies as possible to survive the coronavirus epidemic. Any company that has been hit by the virus can apply for support. The situation for companies in different sectors varies greatly, so belonging to a specific sector is not an absolute prerequisite for receiving support,” says Minister of Economic Affairs Mika Lintilä.

“It is our aim at the State Treasury to make the application for business cost support as quick and easy as possible for entrepreneurs. We have tested the application form with a client panel to ensure clarity and it has received good feedback. We have also simplified the application by not requiring any attachments as we can receive all needed information directly from the Tax Administration,” says Director of Insurance Jyri Tapper from the State Treasury.

Fall in turnover due to coronavirus is a condition for receiving business cost support
Due to the reduced turnover caused by the coronavirus pandemic, companies have struggled to pay inflexible business costs and payroll costs. The business cost support is intended for companies whose turnover has fallen by at least 30% due to the pandemic between June and October 2020, compared with the corresponding period in 2019. If the company was established on or after 1 May 2019, the reference period is from 1 January 2020 to 28 February 2020.

In addition to the company’s own turnover, the decrease in the turnover of companies in the same business sector will be assessed. If the turnover of the sector has decreased by at least 10%, the sector is deemed to have suffered from the coronavirus and the company can apply for business cost support without any additional justification. Assessing the situation in the sector will help to direct support specifically to those companies affected by the virus and speed up the processing of the company’s application at the State Treasury.

The sectors covered by the support will be laid down in a separate decree to be issued by the Government on 18 December 2020. The sectors will be determined on the basis of turnover data from the Tax Administration for June–October 2019 and 2020.

All companies affected by coronavirus can apply for business cost support
A business can apply for business cost support even if the turnover in its sector has not fallen by at least 10% and the sector therefore is not included in the Annex to the Government Decree on Support for Business Costs. In such a case, the company must present particularly compelling evidence that the decrease in turnover has been due to the coronavirus crisis.

Business cost support also covers foundations and associations engaged in business activities. Support may not be granted for business activities in primary agricultural production, fisheries and aquaculture.Unlike in the first application round, there is no minimum level of turnover required from companies to be eligible for support. In this way, the support will be better targeted at small enterprises. The minimum support is still EUR 2,000 and the maximum support is EUR 500,000.A company may apply for this support even if it has already received other direct financial support due to the coronavirus crisis. However, the aid already granted will be taken into account in the amount of the business cost support so that the total aid granted under the same temporary State aid rules of the European Commission does not exceed EUR 800,000.

Business cost support aids entrepreneurs during the pandemic
Support for business costs is one way for the State to support companies during the coronavirus pandemic. The first application round took place in July–August. The State has reserved EUR 550 million for the second round of applications in 2021, but the estimate of the appropriation needed is uncertain and may not be used in whole. The use of the appropriation depends on the number of companies meeting the criteria for support and their costs.

With the help of previous support from Business Finland and ELY Centres, companies were able to develop and redirect their operations in the coronavirus situation.

Other means include guarantees from Finnvera, funding programmes from Tesi (Finnish Industry Investment) and the employment package created in cooperation with labour market organisations, which included eased rules on lay-offs and cooperation negotiations. In addition, temporary reductions to pension insurance contributions and temporary amendments to the Bankruptcy Act are also in effect. Other forms of aid have included special support for the food and beverage services sector and sole entrepreneurs.

Source: Valtioneuvosto.fi