Questions and answers on  business cost support and compensation meant for restaurants and other businesses ordered to close

Support for business costs is intended for companies whose turnover has fallen over 30% due to the coronavirus and that have therefore struggled to pay inflexible costs and payroll costs. According to the Government, the need for and amount of support will be assessed on the basis of the sudden decrease in turnover caused by the coronavirus epidemic. The purpose of the support is to help companies cope until the coronavirus pandemic ends.
 

All companies that the Act on Support for Business Costs applies to can apply for business cost support. The Act does not apply to business activities in primary agricultural production, fisheries and aquaculture. The company’s turnover must have decreased by over 30% in order for the company be eligible for business cost support. Business cost support also covers foundations and associations engaged in business activities.

The sectors that the Act does not apply to are laid down in section 1 of the Act and the general conditions for granting the support are laid down in section 2 of the Act.
 

The basic conditions of aid would remain unchanged. The third round of business cost support is intended for companies whose turnover has fallen by over 30% due to the coronavirus pandemic between 1 November 2020 and 28 February 2021, compared with the corresponding period in 2019–2020.

In addition to the company’s own turnover, the decrease in the turnover of companies in the same business sector will be assessed, similarly to previous application rounds. If the turnover of the sector has decreased by at least 10% during the support period, a company can apply for business cost support without any additional justification as long as the other conditions of aid are met.

The State Treasury can continue to grant aid on a discretionary basis also to companies that do not fall within a specific sector. The grounds for discretionary aid will be specified in the statement of reasons accompanying the Act and in the State Treasury’s application instructions. As a result, companies should be better able to assess and explain in their application why their turnover has decreased.

The reference period has been specified for entrepreneurs who report their VAT data on an annual or quarterly basis.
 

The minimum amount of support is EUR 2,000. The maximum amount of aid is EUR 1 million, which meets the needs of large companies in particular. The maximum amount of support was EUR 500,000 in the previous application rounds.

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 will not exceed EUR 1.8 million. The maximum amount of total aid was previously EUR 800,000. The new maximum amount is based on the Commission’s decision to raise the company-specific ceilings for aid.
 

The scheduled start for applications is 27 April 2021. Companies apply for the support at the State Treasury.
haekustannustukea.fi
 

Other costs include losses and inflexible costs that the company has declared in its application during the support period.

Inflexible costs are defined as costs that the company cannot adjust even though its business activities and sales have decreased. Inflexible running costs may vary greatly from one company to another.
Such costs include, for example, rental and other expenses for property used in business, rent for equipment and goods, concession fees, licence fees and necessary costs of temporary agency labour. The costs may also include advance payments made by the company that have proved to be final. However, inflexible costs do not include, for example, material expenses, new investments or payroll costs that can be reduced. The State Treasury grants the aid and assesses the acceptable costs.

Business cost support can compensate for costs that are somewhat flexible. In such cases, compensation may be paid only for the amount that has remained unadjusted due to the reduced business activity.

The necessary costs for temporary agency labour can also be compensated. These include, for example, expenses that correspond to work performed by the company’s own staff, which is necessary to maintain business or business readiness. This also applies to the costs of the necessary maintenance of property used in business.

The applicant is responsible for reporting that the conditions have been fulfilled. If other costs during the support period have been covered by previously granted business cost support, the applicant should report this in the application. Compensation cannot be granted for costs that have been covered by previously granted business cost support.
 

Payroll costs include the direct wages the company has paid. The State Treasury will collect this information from the income register. In addition, the employer’s non-wage labour costs would be accepted as payroll costs, calculated as a percentage of the payroll costs. Non-wage labour costs include sick pay, holiday pay and holiday bonus, as well as social security contributions and occupational health expenses.

For private traders and general partners of a partnership, the earned income reported to self-employed persons’ pension insurance would be accepted as payroll costs. The contributions to the self-employed persons’ pension insurance and to health insurance would also be accepted as payroll costs based on the company’s declaration.
 

Companies that according to the EU State aid rules were in financial difficulties on 31 December 2019, or that have neglected their tax obligations or are bankrupt are not entitled to business cost support. Support may not be granted for business activities in primary agricultural production, fisheries and aquaculture.

By making some sectors eligible for support ensures that the support is allocated to those companies that suffer from the coronavirus. However, all companies whose turnover has decreased by over 30% due to the coronavirus can apply for support.

Making certain sectors eligible for support helps eliminate factors that cause inaccurate allocation of support. These factors include the effect of seasonal fluctuations on the development of the sector or the decrease in the company’s turnover for reasons other than those arising from the coronavirus epidemic.
 

Support for business costs is one way for the Government to help companies during the coronavirus situation. 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 forms of support include Business Finland’s research, development and innovation loans, Finnvera’s guarantees and the financing programmes of Finnish Industry Investment Ltd, where applications are still accepted. The Government also proposes that the right of entrepreneurs to receive labour market support continue due to the coronavirus pandemic. Other previous forms of aid include special support for the food and beverage services sector and sole entrepreneurs

More information: Guidance for businesses during the coronavirus epidemic
 

New companies were excluded from aid in the previous application rounds because they were not able to demonstrate a change in turnover between the coronavirus period and a reference period in the past. In the third application round for business cost support, companies that fall within the specific sectors defined by the Government Decree, and that were established on or after 1 January 2020, would be eligible for aid on the basis of changes in the average turnover of the sector. However, such companies would not be eligible for discretionary aid because they cannot demonstrate a change in their turnover.  

The Government decree will define the sectors where turnover has decreased by at least 10% and which have therefore been clearly affected by the pandemic. It is to be expected that a company established in one of these sectors during 2020 would have faced specific challenges to start its operations due to the pandemic.  It is more likely that a company operating in one of the sectors defined by the decree would have experienced a fall in turnover, as required by the Act, than a company operating in a sector not covered by the decree. 
 

The aim of the business cost support is to help those companies whose turnover has dropped the most because of the coronavirus pandemic. The decrease in turnover has been set at over 30% in previous application rounds for business cost support and the support that municipalities granted to sole entrepreneurs.
 

All sectors except agriculture and fisheries are eligible for business cost support. As per the government decree, if a company belongs to a sector where turnover has decreased by at least 10% between 1 November 2020 and 28 February 2021, compared with the same period in 2019–2020, the company can apply for aid without further justification. Otherwise, the company can apply for discretionary aid.

he new application round aims to take better account of the inflexible costs typical of different sectors, including the event and tourism sector. Increasing the lower limit of aid to EUR 2,000 will help smaller companies and sole entrepreneurs in particular, which in turn should better meet the needs of the event and tourism sector too. 

The Ministry of Economic Affairs and Employment is currently preparing an event guarantee for the event industry. More information: 
 

Sole entrepreneurs can apply for business cost support at the State Treasury in the same way as other companies.
Sole entrepreneurs and small enterprises have been able to apply for business cost support previously too. However, in the previous application rounds more than 80% of the applications by companies with an annual turnover of less than EUR 70,000 were rejected. This is because the amount of aid payable would have been less than EUR 2,000

The amount of support will be based on the decrease in the company’s turnover and actual costs. Companies would now receive at least EUR 2,000 in aid even if the amount of support they would be eligible for were less than this. This will enable more small enterprises and sole entrepreneurs to receive business cost support as long as they meet the other conditions for it.

To be eligible for business cost support, the company must have a Business ID. The company must also have eligible expenses of at least EUR 2,000 during the support period. As before, there will be no lower limit on the turnover of the company.

Sole entrepreneurs were able to apply for support from municipalities in 2020. The application period for this support ended on 30 September 2020 and no further extension is planned. Instead, sole entrepreneurs will be able to apply for business cost support from the State Treasury. The support granted by municipalities to sole entrepreneurs totalled EUR 94 million, which represents 38% of the EUR 250 million reserved for the aid. 47,200 sole entrepreneurs received aid.
 

In addition to payroll costs, the business cost support covers inflexible costs and losses that the company has declared in its application during the support period.

Inflexible costs are defined as costs that the company cannot adjust even though its business activities and sales have decreased. Inflexible running costs may vary greatly from one company to another.

Such costs include, for example, rental and other expenses for property used in business, rent for equipment and goods, concession fees, licence fees and necessary costs of temporary agency labour. Losses may also include advance payments made by the company that have proved to be final. However, inflexible costs do not include, for example, material expenses, new investments or payroll costs that can be reduced.

The necessary costs for temporary agency labour can also be compensated. These include, for example, expenses that correspond to work performed by the company’s own staff, which is necessary to maintain business or business readiness. This also applies to the costs of necessary care and maintenance of property used in business. Inflexible costs include the costs of maintaining animals needed for business activities and the costs of long-term marketing agreements.

Business cost support can compensate for costs that are somewhat flexible. In such cases, compensation may be paid only for the amount that has remained unadjusted due to the reduced business activity.
The costs must be final and incurred during the support period of 1 November 2020–28 February 2021. After the end of the support period, costs that could be counted as a reduction for the benefit of the applicant cannot be compensated for. The company is required to provide information on its actual costs during the support period also afterwards so that the amount of business cost support can be adjusted to reflect the actual costs.

The State Treasury grants the aid and assesses the acceptable costs.
 

 

The Ministry of Economic Affairs and Employment has prepared a new closure compensation, which will initially apply to small and micro-sized companies that employ a maximum of 49 employees. The Government will prepare a separate closure compensation for larger companies. Companies can apply for the closure compensation at the State Treasury.

If the premises have been closed due to an Act or an official order, the company will be compensated for the payroll costs and other costs, calculated on the basis of costs in February 2021 and number of days the premises remain closed. Payroll costs will be compensated in full and other expenses to 70%. More information on closure compensation

Ministry of Economic Affairs and Employment
 

Previously granted coronavirus support will be taken into consideration and, in accordance with the EU’s rules, the maximum amount of aid per company cannot exceed EUR 1.8 million.

Ministry of Economic Affairs and Employment
 

Companies can apply for support from State Treasury. The scheduled start for applications is 12 May 2021.
State Treasury: https://www.valtiokonttori.fi/sulkemiskorvaus

Ministry of Economic Affairs and Employment