Questions and answers regarding the coronavirus and business financing

First, contact your own bank and other financing providers. The banks have already announced they are ready to look at loan repayment holidays and payment rescheduling due to the exceptional situation caused by the coronavirus epidemic. The Government is also taking action to improve the ability of banks to provide business financing. Finnvera guarantees loans that banks give to companies. Support is also available from the central government by application. Depending on the size of the company, the support is granted by municipalities, ELY Centres and Business Finland. 

The purpose of public funding is to ensure that companies will able to continue to operate profitably after the crisis. Another objective is to secure jobs and services for Finnish people.

Finnvera primarily offers guarantees; i.e. banks provide financing, and Finnvera provides the guarantee. Finnvera also grants loans.

The Government enables the provision of additional financing of EUR 10 billion to businesses through Finnvera by increasing its maximum domestic financing. In addition, the state will increase its coverage of Finnvera’s credit and guarantee losses from 50% to 80%, enabling Finnvera to take bigger risks in the current conditions of economic uncertainty.

Finnvera will also extend the use of SME guarantee and start guarantee for purposes such as financing required to address the financial challenges caused by the coronavirus. Guarantee decisions on loans of less than one million euros granted by banks can be made quickly. This affects a very large number of loan decisions and thereby helps to make loan decisions quickly available to a significant number of companies. Guarantee decisions for loans larger than one million euros require an assessment process at Finnvera, which is why the decision-making takes longer. 

Companies are advised to first contact their bank regarding flexible repayment and other arrangements involving financing already provided. Finnvera may grant a guarantee, if needed.

More information on Finnvera’s website

The government increased Business Finland’s grant authorisations by EUR 800 million to enable support to companies in financial difficulties due to the coronavirus.

Business Finland has launched two new financial services owing to the coronavirus outbreak. They are intended for SMEs in Finland that employ 6–250 people and for midcaps that may employ more than 250 people but have an annual turnover of less than EUR 300 million.

With this funding, businesses can identify, plan and implement new development measures to deal with these effects and address any further disruption.

Other forms of financing offered by Business Finland are available by application as normally. Financing will be also be granted and paid out as normally. Business Finland is very flexible about any changes in project schedules and loan repayment schedules, and generally seeks flexibility in all its activities. If necessary, Business Finland can extend the duration of funded projects and loan periods, and make payments more quickly.

Further information on Business Finland’s website

The Finnish Industry Investment Ltd Tesi will launch a funding programme to ensure that medium-sized enterprises that have run into temporary difficulties due to the coronavirus epidemic will be able to stay in business. In the programme the Finnish Industry Investment Ltd provides funding to medium-sized enterprises, which are highly important in Finland in terms of their employment effect and turnover (turnover at least EUR 10 million, more than 50 employees, profitable business operations before the crisis and potential for this also in future). The investments will vary between EUR 1 million and EUR 10 million. The Tesi programme covers limited liability companies and public limited companies.

The aim is to prevent viable businesses going bankrupt as a consequence of a highly exceptional crisis that has had nothing to do with their operations. Tesi’s stablisation programme will invest in businesses that are in a good position to overcome the financial difficulties caused by the coronavirus epidemic with additional funding. This programme to deal with the liquidity problems faced by businesses complements the follow-on funding that Tesi announced earlier.

Investments to be made from this temporary programme offer a faster track to helping businesses cope with their liquidity crisis. 

More information on Finnish Industry Investment’s website (in Finnish).

 

The Government will increase the authorisation of ELY Centres to grant business subsidies by EUR 400 million; this is to be used for preparing situation analyses and business development measures in companies. ELY Centres provide financing to companies that employ up to five persons at the time the application was submitted and whose business is suffering from the coronavirus situation. Financing can be made available for small enterprises in all sectors, with the exception of agriculture, fisheries and forestry and the processing of agricultural products. Sole entrepreneurs and self-employed are not covered by the aid scheme; they can apply for support from municipalities. The financing is also intended for private traders (‘yksityinen elinkeinonharjoittaja’, ‘toiminimet’) employing more than five people.

A situation analysis allows companies to explore and plan business activities, and to plan new business activities and the reorganisation of production and services in the production disruption caused by the coronavirus and thereafter. Development measures may involve business reorientation, reorganisation of production, development of products and services, and competence building.

Other business services provided by the ELY Centres, i.e. business development aid, business environment development aid, regional transport subsidies and business development services, can be applied for as normally. Similarly, the granting and payment of aid and subsidies will continue as usual. ELY Centres will be flexible about changes to the content and implementation schedules of companies’ business development projects. If necessary, companies can apply for expedited payment of business development aid in several instalments.

Business development services are provided, subject to a fee, by the ELY Centres to support the development of companies providing expert services and SMEs. These services are intended for companies that are equipped to pursue continuous profitable activities and have the will to build their business. Business development aid is a financing product of ELY Centres, which can cater to the varying needs of SMEs, including support for investment. Business development aid may be used for an SME’s business development or renewal purposes in the event of changes in economic or market conditions, or for production reorganisation.

More information on the ELY Centre websites (in Finnish) 

It is important that we make effective use of the EU level measures in Finland. For instance, the European Investment Bank Group is expected to redirect its programmes.

On 19 March 2020, the European Commission issued a communication on its Temporary Framework which considerably relaxed the EU State aid rules to enable Member States to effectively respond to the exceptional economic difficulties caused by the COVID-19 outbreak. This will facilitate the granting of a comprehensive package proposed by the Finnish Government on 20 March 2020 to companies facing financial difficulties due to the COVID-19 outbreak.

Under the Communication, aid may be granted to companies that are facing difficulties due to the emergency conditions caused by the coronavirus. Meanwhile, aid will not be granted to companies that were in financial difficulties on or before 31 December 2019. All support measures referred to in the Communication require a notification of State aid to the Commission, and their introduction requires prior approval by the Commission.

On 20 April 2020, the European Commission approved an aid scheme under which Finnvera can grant guarantees and loans for working capital and for investments to companies facing financial difficulties as a result of the crisis caused by the coronavirus epidemic. This is the first State aid decision taken by the Commission concerning Finland’s actions in the coronavirus situation. The decision is based on the Commission communication of 19 March 2020. 

More information:

Press release of the Ministry of Economic Affairs and Employment 20 March 2020: Temporary flexibility in EU State aid rules to mitigate difficulties caused by the COVID-19 outbreak
Press release of the Ministry of Economic Affairs and Employment 6 April 2020: More flexibilities to the EU State aid rules due to the coronavirus situation
Press release of the Ministry of Economic Affairs and Employment 21 April 2020: Commission approves the first Finnish aid scheme to support companies in the coronavirus outbreak

Entrepreneurs are temporarily entitled to labour market support to deal with the sudden and unforeseen decline in demand due to the coronavirus epidemic. This solution applies to all entrepreneurs regardless of the type of business. Labour market support may be paid for the period 16 March 2020–30 June 2020.

As a sole entrepreneur or self-employed person without employees (‘yksinyrittäjä’), you can apply for municipal financial support during the coronavirus crisis. To apply for this support, you must be a sole entrepreneur or self-employed person without employees who is engaged full-time in Finland in some form of economic activity, regardless of its legally defined format or its source of financing. In other words, the support covers all types of companies.

The municipalities will begin taking applications as soon as possible from sole entrepreneurs and self-employed persons without employees. Sole entrepreneurs can apply for support from the municipality in which their business is registered, i.e. the business domicile registered in the Business Information System. Each municipality organises the application either by electronic means or on paper forms. Municipalities will help entrepreneurs with the application procedures and process applications in the order of arrival.

The support available to sole entrepreneurs is a lump-sum payment of EUR 2,000, which is intended to cover costs arising from the entrepreneur’s business activities. These include, for example, the costs of premises and equipment purchased for business purposes, as well as accounting and office expenses. Eligible costs are those incurred between 16 March and 31 August 2020.

This category of sole self-employed also includes those who are under the Finnish categories of ‘yrittäjä’ and ‘ammatinharjoittaja’ (both ‘self-employed’) who have no employees on their payroll, and also freelancers (no employees).

More information:

Questions and answers on support available to sole entrepreneurs 
Questions and answers on entrepreneurs’ right to unemployment security

Enterprise Finland’s Talousapu financial assistance service offers advice to companies facing payment difficulties. The telephone number of the service is +358 2950 24880 (weekdays 9.00–16.00).

In addition, advice to companies is also available from:

• Suomen Yrittäjät
• TE Offices
• Finland Chamber of Commerce
• Yrityskummit (Business Mentors)
• Business advisers of Finnish Enterprise Agencies and development companies

Due to the coronavirus epidemic, a large number of companies are in difficulties for reasons beyond their control. Several forms of support have been introduced quickly to respond to the exceptional circumstances. Support is provided through Business Finland and ELY Centres, and for legislative reasons it is granted for business development activities. In normal circumstances, support provided by Business Finland and ELY Centres is intended for business development. The state has no existing organisation that could provide emergency financing.

The Ministry follows the standard performance guidance process to steer Business Finland. Business Finland reports to the Ministry of Economic Affairs and Employment on the financing situation daily.

Similarly, the Ministry applies the standard performance guidance process to ELY Centres, and engages in continuous dialogue with the ELY Centres on the support granting criteria and process. The Ministry is provided reports on the coronavirus-related financing daily. In addition, the Ministry prepares the regulations and guidelines concerning financing offered by the ELY Centres, and monitors the support providers and beneficiaries retroactively.

Support is not granted for the same type of project by both BF and ELY Centres. Both applications and decisions are checked to make sure there are no overlaps in payment.  If this happens despite checks, the beneficiary is asked to return the amount paid.