Report submitted to Ministry of Economic Affairs and Employment on financial support granted by Business Finland

BDO Audiator Oy has submitted its inspection report to the Ministry of Economic Affairs and Employment regarding business development funding granted by Business Finland in the coronavirus crisis.

“The key finding of the inspection was that Business Finland has granted support in accordance with the relevant regulations. The inspection did reveal some individual cases in which the criteria for granting support were not met. Naturally we will address these issues. However, on the whole it appears that support has been granted to applicants in compliance with the specified criteria and legislation,” concludes Director Antti Joensuu from the Ministry of Economic Affairs and Employment.

The inspection sought to establish whether the processing of applications was appropriately conducted, and assessed the legal compliance of decisions, the grounds for awarding or refusing funding, the number of applications and processing times, and the compliance of the intended use of funding. The purpose of the inspection was also to determine whether the funding criteria were clear and well communicated.

Compliance in most cases, in individual cases failure to meet support-granting criteria

The support-granting criteria are based on the EU state aid rules, national legislation, and the financing practices of Business Finland. The criteria applied when granting support in the economic disruption caused by the coronavirus crisis have remained essentially unchanged. The most significant change in interpretation has to do with tax debt at the time of application. Instead of a payment plan, applicants need to produce evidence of tax debt not being collected by enforcement proceedings. This is due to the Finnish Tax Administration’s backlogs in the processing of tax payment plans.

Based on the inspection, Business Finland has properly communicated and advised applicants about the financial services and awarding criteria.

In its assessment of eligibility, Business Finland focused on the business development description provided by applicants. A low-threshold approach was adopted regarding the development measures described in applications and the impact of the coronavirus epidemic, which left some room for interpretation regarding the connection between the planned development measures and the applicant’s actual business.

Based on the inspection, Business Finland did not provide financing to any companies that, at the time the financing decision was made, were declared bankrupt or were undergoing restructuring procedures due to insolvency, or had tax debt in collection by enforcement, or had lost more than half of their subscribed share capital due to accumulated losses and were unable to attract further investments. The inspection revealed individual cases in which no documentation was provided to prove that a limited partnership had sufficient equity. Considering the number of support decisions made and the value of financing provided, the non-compliance observed was not significant.

Special attention was paid to making the financing application and processing system easy, simple, and fast. According to the inspection report, the application processing system largely met this objective.

The report also concluded that as a rule, the decisions to grant or refuse financing were based on the guidelines and criteria provided.

“Risk management includes the final reporting stage in which the company is required to report on the project and costs incurred,” Joensuu notes. “At this stage, payment may be suspended and repayment of support already paid out may be demanded if the company has failed to comply with the terms of the decision.”

Inquiries:

Antti Joensuu, Director, Ministry of Economic Affairs and Employment, tel. +358 29 506 3697