Background information

In May 2020, the Government decided to introduce a new form of financial support for companies that had experienced a significant decrease in turnover due to the COVID-19 pandemic. This form of support replaced the two forms of business development aid that companies could previously get either from the public provider for innovation funding, Business Finland, or from the Centres for Economic Development, Transport and the Environment (ELY Centres). Unlike funding from Business Finland and ELY Centres that could be used to develop companies and find ways to adapt to the new market situation, business cost support is a form of funding that is intended to cover fixed costs that are difficult to adjust.

The legal basis for this support is Laki yritysten määräaikaisesta kustannustuesta (508/2020) (unofficial translation: Act on fixed-term business cost support). The application process is administrated by the State Treasury (in Finnish 'Valtionkonttori').

The application period was open between 7 July 2020 and 31 August 2020. The support period is April 2020.

Content of measure

This form of support is available for businesses whose turnover has decreased at least by 30% as a result of the COVID-19 pandemic and that have costs that are difficult to adjust.

This form of support is available for companies whose total turnover for the reference period (March 2019 to June 2019) is at least €20,000. It cannot be granted if the amount of support to be paid is less than €2,000.

Eligibility is tied to sectors that have experienced at least 10% decrease in the overall turnover. Exceptions can be made on serious grounds.

The minimum amount for the support is €2,000 per company. The maximum amount is €500,000. The amount of support is based on the company's turnover, the level of fixed costs as well as payroll costs. The amount is dependent on the company's turnover either in April 2020 or the average turnover of April 2020 and May 2020.

Companies that have applied or received other type of financing may apply for business cost support but this may affect the amount.

The total budget for this measure is €300 million.

Use of measure

According to the Ministry of Economic Affairs and Employment , approximately 12,800 businesses had applied for this support as of 31 August 2020 (the day the application closed). The number companies that had been granted this support was approximately 8,500.

The most significant sector (in terms of number of companies applying) was gambling and betting services, followed by accommodation services and travel agency, tour operator and other reservation service and related activities.

The amount of support that had been paid out to businesses was €107 million.

Update 30 June 2021: According to the Ministry of Economic Affairs and Employment , the total amount granted for companies during the first three application rounds has been around €445 million. This is significantly lower than the total budget of these rounds – around €1 billion. One of the factors that may have contributed to this difference between the granted amount and the amount available is the high rejection rate, at least during the second application round. Helsingin Sanomat reported that during the first weeks of the second application round, around 70% got a rejection. The most common reason is that their turnover had not decreased 30% or more during the support period which is a criteria for eligibility.

In 2021, the Ministry of Employment and Economic Affairs published an assessment (in Finnish) of the effectiveness of the direct financial subsidies, including business cost support. The results indicate that the direct subsidies seem to have had a positive impact on the beneficiaries’ turnover (1% impact for €10,000) support. Business cost support seems to have had the strongest effect. The subsidies seem to also had effect on companies payroll (0,5% for €10,000). In addition, the subsidies have diminished the probability of temporary lay offs (0,5% decrease per €10,000 support). The impact on the probability to permanently lay off has not been as clear. Furthermore, the positive effect of the subsidies is linked to relatively small amount of support (under €200,000).

Update 16 September 2021: According to the State Treasury , around 39,000 companies had applied for this support as of 15 September 2021. In total €682 million has been paid out to the eligible companies. Companies in the restaurant industry had received the largest amount of the support: €86 million. The second largest amount has been paid to companies in the hotel industry (€56 million), followed by sports and recreation (€45 million).

Target groups

Workers	Businesses	Citizens
Does not apply to workers	Applies to all businesses	Does not apply to citizens

Actors and funding

Actors	Funding
National government	National funds

Social partners

Social partners' role in designing the measure and form of involvement:

	Trade unions	Employers' organisations
Role	Unknown	Consulted
Form	Not applicable	Direct consultation outside a formal body

Social partners' role in the implementation, monitoring and assessment phase:

• No involvement
• Main level of involvement: Sectoral or branch level

Involvement

No information available.

Views and reactions

The Confederation of Finnish Industries (in Finnish 'Elinkeinoelämän keskusliitto') argues that while there are many positive aspects to the business cost support, there are also some significant flaws. The key points of concern are limiting the maximum amount a company can receive, the low overall budget of the measure and limiting this measure to certain sectors.

The Central Organisation of Finnish Trade Unions (SAK) has criticised the business cost support. Their key argument is that a financial support that is paid out afterwards does not support employment in the best possible way. Instead, the support should be directed to future investments such as research, business development and employment.

Sources

• 01 June 2020: Business cost support (Yritysten kustannustuki) (www.valtiokonttori.fi)
• 08 June 2020: EK huo­lis­saan ylei­sen kus­tan­nus­tuen riit­tä­vyy­des­tä (ek.fi)
• 01 September 2020: COVID-19 update (Korona tilannekuva) (valtioneuvosto.fi)
• 21 October 2020: Kustannustuki on ongelmallinen tapa tukea työllisyyttä [Business cost support is a problematic way to support employment] (www.sak.fi)
• 25 November 2020: Frequently asked questions about business cost support (2nd round of application) (www.valtiokonttori.fi)
• 18 December 2020: Companies in all sectors can apply for business cost support if their turnover has decreased due to COVID-19 (valtioneuvosto.fi)
• 04 March 2021: Legislative proposal to Parliament: Third application round for business cost support in April to include sole entrepreneurs (tem.fi)
• 20 April 2021: Koronakriisin aikaisten yritystukien arviointi [Assessment of coronavirus-related business subsidies] (julkaisut.valtioneuvosto.fi)
• 18 May 2021: Draft bill out for comments: Another round of business cost support to open and new compensation for large companies under preparation (valtioneuvosto.fi)
• 08 June 2021: Yritysrahoitus koronatilanteessa – budjetoidut ja myönnetyt tuet 2020–2021 [Company funding durign COVID-19 - budgeted and granted support 2020-2021] (tem.fi)
• 31 August 2021: Yritysten kustannustuki [Business Cost support] (www.valtiokonttori.fi)