Report: Companies consider business development aid an effective form of financing
A recent report by the Ministry of Economic Affairs and Employment shows that companies are, as a rule, very satisfied with the business development aid granted by the centres for economic development, transport and the environment (ELY Centres).
A survey was conducted to assess the efficiency and effectiveness of the development aid. The survey was sent to all companies that had applied for business development aid between 2014 and 2019. It was also sent to interest groups and financing officers at ELY Centres. The total number of respondents was 698 companies, 31 interest group representatives and 25 payment and financing specialists from ELY Centres. The survey was conducted by Owal Group.
Positive effects on employment
The purpose of aid granted for business development is to generate new business, to promote the growth and internationalisation of SMEs and to strengthen innovation in enterprises. Business development aid may be granted to SMEs that are equipped to run profitable operations and have sufficient resources for measures to improve their competitiveness.
The companies that had applied for business development aid felt that the application and granting process worked well, and they were, as a rule, satisfied with the support provided by ELY Centres during the application process. According to ELY Centres, the electronic service process facilitated the processing of applications.
The survey showed that the development aid generated positive effects on employment. Companies that had received business development aid recruited more people than reference companies, and for permanent, full-time jobs.
According to the survey, approximately half of the projects would not have been carried out without the aid. More than half of companies responded that the business development aid had been a contributing factor to the expansion and growth of their business activities, and almost half said the development aid had fuelled their internationalisation.
Based on stakeholder interviews, development aid is considered a significant form of financing, especially from the regional perspective, as it enables support based on regional needs and objectives. In addition, those interviewed believed that development aid will be increasingly important for regions as the funding provided by the EU for rural areas decreases.
An increase in the minimum amount of development aid increases effectiveness
According to the Ministry’s report, the focus of business development aid varies by region, and aid is used to finance very different types of projects and enterprises in different regions.
Development aid has also been used to some extent to finance projects that are small proportionately and in terms of euros, which, according to the report, erodes the efficiency of the aid and limits its potential effectiveness. The report therefore recommends raising the minimum size of business aid granted, and preparing related guidelines. It also recommends more determined allocation of financing to high-risk projects of smaller and growth-seeking companies.
The previous survey on the effectiveness of business development aid was conducted in 2013. The findings of this survey on the projects and companies financed were very similar to those of the 2013 survey. The results of the survey will be used for a legislative reform on business development aid on which the Government plans to submit a proposal in autumn 2020. The information from the survey will also be used in preparations for the next EU regional and structural policy programming period.
Mikko Ojala, Senior Ministerial Adviser, Ministry of Economic Affairs and Employment, tel. +358 29 506 3506
Raimo Puhto, Senior Specialist, Ministry of Economic Affairs and Employment, tel. +358 29 506 3688