Eurofound's EU PolicyWatch collates information on the responses of government and social partners to the COVID-19 crisis, the war in Ukraine, rising inflation, as well as gathering examples of company practices aimed at mitigating the social and economic impacts.
Factsheet for measure EE-2020-13/347 – Updated – measures in Estonia
|Country||Estonia , applies nationwide|
|Time period||Temporary, 27 March 2020 – 31 May 2022|
|Type||Legislations or other statutory regulations|
Supporting businesses to stay afloat
– Access to finance
|Author||Ingel Kadarik (Praxis Center for Policy Studies) and Eurofound|
|Measure added||07 April 2020 (updated 20 September 2022)|
Due to the outbreak, several companies are in a difficult position financially to continue providing their services/products, to pay their loans or to start a new business (for example, opportunities created by the corona outbreak). For this purpose, the state provides additional funds to KredEx (a state founded foundation) and Rural Development Fund to provide support measures to companies in a form of loans and loan guarantees. On a smaller scale, those measures are already available and relevant instructions for the applicants and terms and conditions of the measures have been approved by the KredEx at the end of March 2020, but additional government finances are needed for the full provision of these measures. For this, the supplementary state budget was approved by the Parliament on 15 April 2020.
KredEx, the Credit and Export Guarantee Fund (state founded foundation), provides loans and loan guarantees to companies. To relieve the impacts of the COVID-19, KredEx offers additional loan guarantees and loans:
The guarantee enables a company to secure the obligations of an enterprise, arising from loan, leasing and guarantee contracts.
Requirements to be eligible:
Exceptions are available: the maximum guaranteed obligation could be up to 25% of the company's turnover in 2019 or to a justified 18-month liquidity requirement for a SME or to a justified 12-month liquidity requirement for a large company).
Specific conditions by type:
The validity period of the guarantee is 72 months; the loan period is 6-72 months. The guarantee can be issued and amended until 31 December 2020.
For agriculture, fishing and food industry companies, similar measures are provided by the Rural Development Fund . The total amount of the funding is €200 million.
The maximum loan amount for single-applicants is up to €1 million, if the loan is taken together with a credit or financing institution, the maximum amount is €2 million. The interest rate is from 2% and fixed for 2 months. The loan period is up to six years, in case of investment loans - ten years. At least 30% of the loan must be guaranteed (e.g. real estate, surety or other). Loan applications are accepted until 23 December 2020.
In case of loan guarantee, similar to KredEx measure, the total amount of the loan to be guaranteed cannot exceed double the salary cost of the company for 2019 with social tax, 25% of the company's turnover in 2019 or a justified 18-month liquidity requirement for an SME or a justified 12-month liquidity requirement for a large company. Up to €5 million is guaranteed, but not more than 90% of a proportionally guaranteed loan or 35% of a fixed guaranteed loan. The length of the guarantee is up to six years.
KredEx: data available here .
By 8 July 2021, 610 applications have been filed, of which 485 have received a positive decision in the total amount of loans of €385.9 million.
By 28 September 2021, 719 applications have been filed, of which 595 have received a positive decision in the total amount of loans of €403.8 million.
Rural Development Fund: data available here .
By 2 July 2021, 166 applications for guarantees in the amount of €53.5 million and 371 applications for loans in the amount of €156.7 million were received. 159 guarantee (€46.9 million) and 314 loan (€85.7 million) decision were made and altogether 444 contracts were signed (total amount €118 million).
By 28 September 2021, 176 applications for guarantees in the amount of €58.3 million and 371 applications for loans in the amount of €156.7 million were received. 163 guarantee (€48.5 million) and 314 loan (€85.7 million) decision were made and altogether 449 contracts were signed (total amount €120.3 million).
By 10 December 2021, 181 applications for guarantees in the amount of €61.6 million and 371 applications for loans in the amount of €156.7 million were received. 165 guarantee (€49 million) and 314 loan (€85.7 million) decision were made and altogether 452 contracts were signed (total amount €121.3 million).
In November 2020, the National Audit Office of Estonia published its audit on KredEx measures. The main conclusions were that the interest of companies for the KredEx measures has been significantly lower than initially expected and as the aims, terms and conditions of the measure were too general, the benefits expected by state from the measure should be more clearly specified.
In May 2021, the National Audit Office published an audit covering the main support measures provided to companies during the crisis. The main conclusions were that KredEx measures have mostly been used by companies indeed in need of the support, while the Rural Development Fund's support was mainly used by companies whose activity was less affected by the crisis compared to those who did not receive the support. This was further specified in June 2021, when the Audit Office published an audit on Rural Development Fund's procedures for loan applications, especially on the equal treatment and transparency of the allocation of the crisis support. The main conclusion of the audit was that the actual impact of COVID-19 was not taken into account sufficiently enough when assessing the applications and not enough information was collected for sufficient assessment when making decisions. Thus, as the measure was intended for crisis support and while indeed some companies really needed the support, there is a risk that as a whole the support measure did not at the end solve the crisis and decreased the state's ability to help those in need in the future.
|Does not apply to workers||Applies to all businesses||Does not apply to citizens|
Public support service providers
Social partners' role in designing the measure and form of involvement:
|Trade unions||Employers' organisations|
|Role||No involvement as case not in social partner domain||Consulted|
|Form||Not applicable||Any other form of consultation, institutionalised (as stable working groups or committees) or informal|
Social partners' role in the implementation, monitoring and assessment phase:
In addition to the sectoral business association, the Estonian Employers Confederation was consulted during the design of the measure. The possibility to give feedback was open to all interested parties. Trade unions did not participate in the consultation process due to the nature of the measure.
Peak-level employers organisation and sectoral business organisations have been partially in agreement with the measure, stating that while overall the measure is necessary, numerous restrictions of the measure hinder the accessibility of the measure.
Eurofound (2020), Emergency loan and loan guarantee, measure EE-2020-13/347 (measures in Estonia), EU PolicyWatch, Dublin, https://static.eurofound.europa.eu/covid19db/cases/EE-2020-13_347.html
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Disclaimer: This information has not been subject to the full Eurofound evaluation, editorial and publication process.