There are hopes that the situation with corona infections will soon be under better control and that various restrictions will gradually be dismantled. However, some business sectors have already experienced significant financial damage and the future is still uncertain. We have gathered a list and comments on the different forms of support that have thus far been created and are available for small businesses.
Finnvera loan guarantees for bank loans, i.e. a state guarantee can be applied for directly through the bank. The terms of the bank loan are otherwise market-based, although banks have a more flexible view on instalment free periods than generally. Finnvera also charges fairly high fees for its own guarantees.
- Business Finland offers aid-based business development funding in the disruptive circumstances, either for preliminary research or development of a new project. The applicant can be a company employing 6-250 people (including entrepreneurs). Employees may be laid off at the time of application.
The benefit can be granted for 80% of the total cost of the project and up to 70% of the grant may be paid in advance. Preliminary research funding, Companies may use the funding to investigate and plan new business, alternative subcontracting chains and organize the production in the event of a disruption and for the future. The recommended project duration is 4 months and the maximum project funding is EUR 12,500. Development funding, Companies can use the funding to carry out development plans as identified in an exploratory study or otherwise in their operations, in order to improve their potential for success during and after the disruption caused by the coronavirus. The aim must be to create new solutions for the company relating to products or production. The recommended project duration is one year and the maximum budget is EUR 125,000.
It is important to note that these grants cannot be used for normal running costs (wages, marketing, rents), investments or, for example, or technical setting up of e-commerce. Instead, the wages and other costs allocated to the project must be related to planning or new development. The demarcation is sometimes really tricky, but it is definitely worth keeping the subject in mind when applying or amending an application. NB. You can complete/edit your open Business Finland application until it is processed. The necessary financial information for the application is minimal: number of employees, project costs, project financing plan. In addition, it must be defined how the corona crisis has made the situation more difficult for the company.
- Ely Centres grant funding either to carry out a situation analysis or for business development measures. A business with a maximum of 5 employees is eligible for funding regardless of the company form. However, funding cannot be granted for a private entrepreneur alone, the project must involve at least two people in one way or another.
The maximum amount of funding for situation analysis is 80% of the calculated costs (e.g. wages 2000 eur/month), but a maximum of EUR 10,000. The maximum amount for development measures is 80% of the actual costs approved, to a maximum of EUR 100 000. The definitions of acceptable costs follow the main principles of Business Finland’s guidelines.
Interpretations of who can apply for funding have at times been difficult. Applications have been accepted, e.g. in a situation where the applicant was a jointly owned company of two entrepreneurs, but has paid only one person’s wages. Or a company that previously has paid no wages at all, but is hiring outside workforce for a development project. However, it has been difficult to include the entrepreneur’s own wages in the project, if wages have not been paid in the past. There have been different interpretations here, too.
In general, the Ely Centres have cut the financing decisions quite a lot compared to what the applicant has proposed. The total cost of the projects has also been limited to a maximum of 30% (-50%) of the turnover. For new companies, the turnover used may have been the future projected turnover.
Here too, the necessary financial information for the application is quite minimal: the number of employees, turnover and the balance sheet total of the past 5 years. In addition, the costs of the project and the funding plan. In addition, it is necessary to clarify how the corona crisis has complicated the companys situation.
Note. The ELY Centre application cannot be revised/edited after it has been submitted.
- Operating support for sole entrepreneursSole entrepreneurs can apply for a one-off operating aid from their municipalities. The channel for applications vary, but the basic principles are the same:
- The potential grant amount is EUR 2000 and is intended for the company’s running costs
- The entrepreneur must justify the full time activity either with a valid YEL insurance or an annual turnover of more than EUR 20,000
- The last financial statements and a tax debt certificate, which can be stored in MyTax, are required as attachments. If there are tax liabilities, a payment plan must be agreed with the tax administration. In addition, it has to be clarified that the coronavirus has weakened the financial situation of the company, i.e. in practice the turnover has decreased by at least 30% from the normal situation. The requirements for this justification vary between municipalities.
The support may only be granted once, but the application period should be open until autumn. It is therefore recommended that you apply for this support only when you are able to properly justify a decrease in turnover. This is likely to be seen in the April Income statements at the earliest.
- Restaurant support The government’s proposal for support for restaurants is still under discussion in parliament. The final form of the aid and the application time/method remain to be decided, but the formulae for calculating the aid appear rather difficult at this stage.
The aid proposal includes two parts, one for employment support and another for the reasonable reimbursement of costs during the period of cessation. The amount of aid for employment is proposed at EUR 1 000 per eligible worker. That aid would be paid for an employee that is paid at least EUR 2 500 for the three months following the end of the restriction obligation.
The costs would be reimbursed for rental and running costs accrued during the closing period. They are intended to be proportional to the change in the company’s sales compared at the beginning of the year. This comparison would be based on the January-February VAT return information.
The rebate share would be 15 % if the company’s average sales in January-February did not exceed EUR 1 million. For sales exceeding EUR 1 million, the rebate would be 5 %. A maximum amount for a restaurant could receive EUR 500 000. In addition, the support would be reduced by any ELY or Business Finland development grant that the company may already receive.
- Temporary unemployment benefit for entrepreneurs According to the temporary legislative amendment, an entrepreneur can receive labour market support from KELA when the income from the business has decreased due to the coronavirus.
The marginal income for receiving labour market support for every person working as an entrepreneur in a business is EUR 1090 per month, or strictly speaking, the entrepreneurial income is less than EUR 1 089.67 /month due to the pandemic. The amendment is valid between March 16th. – June 30th. 2020. The benefit is applied for from KELA.
With regard to earnings-related allowance, no changes in the unemployment security for self-employed persons were made. Earnings-related allowance can continue to be paid to an entrepreneur who has fulfilled the employment conditions if the business activity has ceased, the work in the business has ended or the business is part-time or short-term.
- Other new support There will be another financial aid available for any business who has suffered from corona crisis. This support is not restricted to any particular line of business as long as it is obvious the turnover has declined dramatically. The details how to prove that are not clear yet but the consideration will be based on the application of the business owner and the tax information. Most likely it has to be shown that the revenues have declined at least 30%.
This support can be used for operating expenses as rents and salaries. The amount is anything between 2000 and 200 000 euros and is based on the size of the business. The applications will be handled at the State Treasury and it is estimated the application platform will be open in the month-end of May/June.
If you have already received other government financial supports they will be deducted from this new support. However only 70% of Business Finland or ELY supports are taken into account.
A notification of beneficial owners of limited liability companies (Oy) and cooperatives to the Trade Register
A notification of beneficial owners must be made to the Trade Register by 1 July 2020. The beneficiaries are defined as follows:
A beneficiary shall be considered to be a person who fulfils at least one of the following conditions:
- He owns more than 25 % of the company’s shares, either directly or indirectly through another company.
- He holds more than 25 % of the votes in the company, either directly or indirectly through another company.
- He exercises effective control over the company on other grounds. Other grounds may be e.g. a shareholder agreement.
Note! The company must submit a notification of beneficial owners even if the company does not have beneficiaries that meet the above requirements or they are not known to the company. In this case, in accordance with the Money Laundering Act, PRH enters the members of the Board of Directors, the CEO or any other person in a similar position as beneficiaries in the Trade Register.
The requirement does not apply to sole traders or partnerships if only private persons are shareholders! In practice, however, even small limited companies and cooperatives will have to submit detailed information to the Trade Register about the owners of the company. The information to be registered includes the name, personal identification number, nationality, municipality of residence and ownership information. However, it is worth noting that this information will not be publicly available in the Trade Register. Access to the information requires a purpose in accordance with the Money Laundering Act.
Digitase is now making Finnish beneficiary notifications
Please confirm by May 25, 2020 if you would like us to make this declaration. The charge is EUR 30.50 (+VAT) and the information is submitted with the owner information in accordance with the company’s last tax return. The easiest way to place an order with us is via the DigibalanceApp mobile app under Consulting – Order with app. You can also assign to AutoAccount autoaccount@digibalance.eu or consultant service konsulttipalvelu@digitase.fi
Be safe,
Mikko Ilves
Chairman of the Board
AutoAccount OÜ and Digitase Oy
