The country is now passing through a state of emergency in the wake of recent outbreak of coronavirus infection that has affected every aspect of life including business and economy. The government, however, has announced a number of support and intensive packages for entrepreneurs to survive the crisis for a certain period.
The country is now passing through a state of emergency in the wake of recent outbreak of coronavirus infection that has affected every aspect of life including business and economy.
To cope with the scare, the government on March 16 imposed the emergency effective until April 13 and on March 30 extended its period for one month until May 13.
Like all other sectors, the entrepreneurs of the country are facing severe crises with most of the businesses closed down. The situation of the entrepreneurs of Rovaniemi is no exception.
The government, however, has announced a number of support and intensive packages for entrepreneurs to survive the crisis for a certain period.
The government and the Association of Finnish Local and Regional Authorities have prepared a financing model for sole entrepreneurs to help them cope with the COVID 19 crisis and its fallout.
Under the support programmes, sole entrepreneurs are now able to apply for financing from municipalities to address difficulties caused by the state of emergency. Financing will be made available as soon as details regarding the model and its implementation are finalised.
Businesses that were profitable before the coronavirus-induced interruption will be eligible for support. The support consists of a fixed sum which could be used for any business expenses, particularly fixed costs such as rents. The support scheme would be in effect for six months.
Entrepreneurs may be entitled to this support as well as extended unemployment security. The municipality granting the financing will ensure that the support is not excessive, given the scope of the business activities in question.
“The emergency situation has major impacts on entrepreneurs in Rovaniemi, and there are many companies affected by this lockdown. In particular, tourism and accommodation, the service industry, border trade and various event management services are suffering from this state due mainly to loss of customers and lack of cash flow,” Vice President of the Lapland Chamber of Commerce Elsi Malkki.
She said the number of layoff announcements has increased. Quoting a recent survey, the chamber adviser said 92 per cent of the respondents to the study estimated that COVID-19 would have some impact on business, and about 30 per cent reported an increased risk of bankruptcy. She, however, pointed out the possible supports for entrepreneurs, such as funding extended by Business Finland for business development amid such disruptive circumstances.
“These services are targeted at SMEs and midcap companies in Finland whose business is suffering from coronavirus: Funding for preliminary studies on business disruptions is up to 10,000 euros and development funding for business disruptions is up to 100,000 euros,” Elsi Malkki mentioned.
Recipients of the funding services include companies in the tourism industry, supplementary services for the tourism industry, creative industry and performing arts, among others, and all industries whose subcontracting chains have been or will be impacted by the coronavirus epidemic.
“The application process is simple and decision-making is fast. This has been very popular. So you need to be quick in applying for this funding opportunity,” she said, adding that Finvera’s financial authorisation has also been increased. The access of entrepreneurs to unemployment security is also a very important help for small companies in this situation.
Terming the situation very difficult as no one can yet predict how long the situation will continue, she said companies have been very agile in developing new ways of services like home delivery, online marketing, remote services etc. Now more than ever, it is important to support local businesses and use local services.
Meanwhile, the ELY centres (Centre for Economic Development, Transport and the Environment) have also launched new financing services as of March 31, and there will be two types of funding available – smaller grants of a maximum of 10,000 euros (grant rate 80 per cent) for making analysis, and a maximum of 100,000 euro (grant rate 80 per cent) for development measures, like developing networks of subcontracts, product and service development, and strengthening of expertise.
The Finnvera has announced a guarantee package, too, which would be used for meeting the need for working capital in cases where Finnvera’s Start Guarantee or SME Guarantee is not suitable for the company’s situation, for example due to the amount of loan needed.
Finnvera’s guarantee coverage has been raised to 80 per cent and no additional collateral is required for guaranteeing a EUR 150,000-1,000,000 corporate debt bond granted by a bank. In addition, Finnvera has put into operation a fast and simplified procedure to deal with applications and to validate guarantees.
“Finnvera takes a flexible approach towards all reorganisation needs for financing caused by the coronavirus situation. Finnvera has the capability to significantly increase corporate financing for the SMEs and help enterprises overcome the crisis,” said Lea Marski, a business expert from the ELY-Centre.
She said Business Finland is allocating funding for SMEs and midcap companies whose business is affected by the coronavirus outbreak.
“ELY Centre has also launched a new financing instrument to develop businesses and help enterprises survive the crisis. It is targeted to small businesses that employ maximum five persons,” she added.
She pointed out that Enterprise Development Services can be tailored to help businesses overcome the coronavirus crisis. The consultancy services can be used, for example, to make a current state of business analysis, a development plan and financial calculations and plans. The services are highly subsidised and the cost for businesses has been diminished. The cost is now only 30 euros per day.
“The situation is very challenging for many businesses. I suggest that the entrepreneurs should take advantage of all the helps and instruments now available to get though these extremely difficult times,” Lea Marski added.
According to ProAgria Lappi Managing Director Johannes Vallivaara, when the incomes are sliding and companies are not able to reduce the costs at the same speed, they are facing an inability to bear the running costs. “In many companies, labour costs are one of the highest. So they need to lay off employees. It’s causing more problems, when people don’t have money to buy products or services and driving more companies into insolvency,” Vallivaara told.
He said ProAgria is an association but it is offering business advisory services to companies that are located in rural areas. Those services are financed by the European Rural Development funds.
“Cut all the costs you can – the most important thing is to save the cash, if you still have it. Make a cash-flow forecast where you are simulating different kinds of situations. Organise your possible loans. Ask help from business advisers who can help you with cash-flow forecast and perhaps bring some ideas where to get new cash-flow. At least you can share your thoughts and you are not that alone. Use your time for positive acts, not worrying, even if it’s a difficult thing to do. You can’t change the weather, you can just adapt to it,” is the advice of Vallivaara for the entrepreneurs.
City of Rovaniemi - Daily Finland Report