The government prepares new rounds of application for public aid for entrepreneurs who have seen their business damaged by the effects of the Covid-19 epidemic. At the end of April and in May, those who have seen their income substantially reduced or have had to close due to restrictions may request two types of financial support.
The support for business costs is intended for companies whose turnover has decreased by at least 30% due to the coronavirus pandemic.
Meanwhile, closure compensation is meant for small and micro-sized companies where customer premises have been closed by law or order of an authority.
The third application round for business cost support will begin on 27 April and the application round for closure compensation on 12 May.
Companies can apply for both forms of support at the State Treasury.
Government says the Act on Support for Business Costs has been amended to make the granting of aid to sole entrepreneurs and small companies more flexible and to create a new form of aid, closure compensation, to companies closed down due to the coronavirus epidemic. The President of the Republic approved the amendments to the Act on 9 April, and the Act will enter into force on 12 April 2021.
“We have updated business cost support to meet the current needs of both small and large companies. In addition, small companies shut down by the authorities due to the epidemic will benefit from a new form of aid. We are also preparing closure compensation for large companies and an event guarantee,” says Minister of Economic Affairs Mika Lintilä.
Companies with decreased turnover
The third round of business cost support is intended for companies whose turnover has fallen by at least 30% due to the coronavirus pandemic between 1 November 2020 and 28 February 2021, compared with the corresponding period in 2019–2020, as a rule.
All companies can apply for business cost support. In April, the Government will issue a decree on the sectors that can apply for support without providing further justification. These include sectors where turnover has decreased by at least 10% during the period. If a company does not operate in one of the sectors defined in the decree, it must explain how the epidemic has caused a fall in turnover.
Business cost support is compensation for the company’s inflexible costs and payroll costs, but it does not compensate for a fall in turnover. The Act now defines inflexible costs in more detail. In addition, a certain share of the employer’s non-wage labour costs, such as social security contributions and occupational health costs, can be reimbursed.
A minimum of 2,000 euros in business cost support will be paid to companies if they meet the conditions for it. This will help sole entrepreneurs in particular. The amount of support will be based on the decrease in the company’s turnover and actual costs.
To be eligible for business cost support, the company must have a Business ID. The company must also have eligible expenses of at least 2,000 euros during the support period.
The maximum amount of aid will increase, which in turn will meet the needs of large companies in particular. The maximum amount of aid a company can receive will rise from 500,000 to 1 million euros.
Closure compensation to restaurants
The Government proposes that companies be paid compensation if they, due to an Act or an official order, have to keep their premises closed in order to stop the spread of the coronavirus.
This new form of compensation applies to small and micro-sized enterprises that employ a maximum of 49 employees. Companies that have been closed down can also apply for business cost support.
Closure compensation for larger companies is under preparation. The Ministry of Economic Affairs and Employment is currently negotiating with the European Commission about the terms and maximum amount of support for large companies.
Closure compensation applies to restaurants and other food and beverage service businesses that are temporarily closed to customers under the Act on Accommodation and Catering Operations. However, meals may be sold for takeaway. The amount of compensation will be based on that part of the company’s business operations that the closure affects.
Sports centers, gyms, saunas
Compensation can also be paid to companies, which the municipality or the Regional State Administrative Agency has ordered to be closed under the Communicable Diseases Act. Such establishments include sports facilities, gyms, public saunas, swimming pools, spas and indoor playgrounds.
Compensation will be paid to companies for the period they remain closed. If a company has restricted the number of customers in its premises but has not closed completely, it is not entitled to compensation.
The amount of compensation is based on the company’s costs in February 2021 and that part of the company’s business operations that the closure affects. Compensation will be paid for 100% of payroll costs and for 70% of other costs, such as rent.
Previously granted coronavirus-related support will be taken into account in the amount of business cost support and closure compensation. Under the EU’s State aid rules, the maximum amount of aid may not exceed 1.8 million euros.
Applications until 23 June
Applications for business cost support will be accepted until 23 June 2021. Companies must apply for closure compensation within four months after the end of the calendar month when the order to keep the premises closed ended.
The first application round for business cost support took place in July–August 2020. The second round began in December 2020 and ended in February 2021. A total of 356 million euros has been reserved for the third round of business cost support and closure compensation.
“Due to the two previous rounds of business cost support, the State Treasury already has experience in granting the aid. Based on the customer feedback, we have succeeded well in the task. That is why we are happy to take responsibility for organising the third round of business cost support and the new closure compensation,” says Jyri Tapper, Director of Insurance from the State Treasury.