Reimplementation of business cost support proceeding

The purpose of business cost support is to help companies survive the difficult financial situation caused by the coronavirus pandemic. The support is a compensation for the company’s fixed costs and payroll expenditure, not for loss of revenue. The Government proposed an extension for business cost support on 29 October 2020.

Certain amendments are now being proposed for the support to align it better with the needs of those businesses that have suffered the most. The principles for granting support for business costs will stay the same, however.

The amendments are planned to enter into force in December 2020, and the aim is to start accepting applications around the end of December. As before, companies will apply for the support from the State Treasury. The Government Proposal may yet change in Parliament.

“The coronavirus situation remains difficult for many companies and sectors. We are responding to these companies’ distress and helping them over the COVID-19 epidemic by reimplementing support for business costs. We have also begun the further preparation of support for sole entrepreneurs,” says Minister of Economic Affairs Mika Lintilä.

All companies are eligible

Support for business costs is meant for companies that have experienced significant reductions in turnover due to the coronavirus pandemic and consequently have trouble coping with the fixed payroll and other costs of their business operations.

A company can apply for business cost support even if it has already received other direct forms of support intended to alleviate the consequences of the pandemic. However, previously granted subsidies will be counted against the overall support cap of EUR 800,000, which the total aid granted to a company may not exceed. The maximum amount of support paid to a company is provided for in the European Commission’s temporary rules on state aid.

Being eligible for business cost support still requires a significant reduction in the company’s turnover. The reductions in turnover are examined at the level of individual companies and for the sector as a whole. Comparing sectors enables the support to be allocated to the companies that have suffered the most from the coronavirus pandemic.

A sector whose total turnover has decreased by at least 10 per cent is considered to have been hurt by the coronavirus. If a company operating in a sector whose turnover has not decreased by 10 per cent or more considers that the COVID-19 pandemic has nevertheless affected its business operations, it must present compelling evidence of this in its application.

Applications for support are processed individually for each company, and a reduction of at least 30 per cent in turnover is currently required for a company to be eligible for support. The company must also meet the other conditions for granting support laid down in the Act.

Support period extended to five months – minimum turnover requirement removed

The Government is proposing a five-month support period from 1 June 2020 to 31 October 2020. The previous support period was two months.

The reduction in turnover is compared to the corresponding period in 2019. For companies established on or after 1 May 2019, the reference period will be from 1 January to 28 February 2020.

The minimum turnover threshold (EUR 20,000 during the four-month reference period) will be removed in order to better allocate support to small enterprises. The minimum amount of support would still be EUR 2,000.

The sectors eligible for support will be provided for in a separate decree issued later. The sectors will be chosen on the basis of turnover data from June to October 2020 obtained from the Tax Administration.

Support for business costs one way of supporting entrepreneurs during COVID-19 pandemic

The support for business costs now being reimplemented is one way for the State to support businesses during the coronavirus pandemic. The coronavirus support previously granted by Business Finland and the Centres for Economic Development, Transport and the Environment enabled companies to develop and refocus their operations due to the coronavirus.

Other support methods include Finnvera guarantees, Finnish Industry Investment Ltd’s funding programme, and the employment package assembled in cooperation with the labour market organisations, which eased the requirements on layoffs and cooperation negotiations, among other things. A temporary reduction in earnings-related pension contributions and a temporary amendment to the Bankruptcy Act have also been implemented. Other forms of support already granted include the special support for the food and beverage service sector and COVID-19 support for sole entrepreneurs and self-employed people.

For further information, please contact:
Jenny Hasu, Special Adviser to the Minister of Economic Affairs, tel. +358 29 504 7213
Sampsa Nissinen, Ministry of Economic Affairs, tel. +358 29 504 7189