A closer look at crisis relief measures

Over the past few weeks, the Finsa team has communicated with dozens of companies and helped them to explain the government’s crisis relief measures, to assemble financial plans and to analyse creditworthiness. We have also taken a critical look at reports from 2019, and we are communicating with accountants to correct various recordings. Furthermore, we are helping the leaders of enterprises to formulate the plans in their head as veritable business plans and financial projections.

These observations have revealed, that even though there is a lot of information out there, the situation remains unclear for many entrepreneurs and private individuals. Subsequently, I will lay out some key points of reference with regard to the business opportunities that the crisis relief measures offer at this point.

Measures directed at private individuals

  • The measures directed to private individuals are managed through the Estonian Unemployment Insurance Fund (Töötukassa), and appeals are possible through the employer. This is suitable in instances when: a company’s turnover has significantly dropped, there is no work to offer to employees, there have been salary reductions (at least two out of three conditions must be met). Assistance given during max 2 months. This measure is meant uniquely to support employees working under an employment contract.

Corporate bank loan guarantees through KredEx and the Rural Development Foundation (MES)

  • Loan amount maximum 2 x 2019 salary expenses including taxes (in case of a justified exception up to 25% of the previous year’s turnover or 18 months of liquidity needs);
  • As of 31.12.2019, the company’s equity may not be less than 50% of the company’s share capital;
  • As of 31.12.2019, there must be no tax debts;

Direct corporate loans through KredEx

  • Loan amount maximum 2 x 2019 salary expenses including taxes (in case of a justified exception up to 25% of the previous year’s turnover or 18 months of liquidity needs);
  • As of 31.12.2019, the company’s equity may not be less than 50% of the company’s share capital;
  • As of 31.12.2019, there must be no tax debts;
  • Certain sectors (agriculture, rural economy, financial and insurance activities, etc.) and certain activities (eg car acquisition, real estate development, etc.) are excluded.

Direct corporate loans through the Rural Development Foundation

  • Aimed at agricultural, rural and fishing enterprises;
  • As of 31.12.2019, the company’s equity may not be less than 50% of the company’s share capital;
  • For a COVID-19 loan, the maximum amount is a maximum of 2 x 2019 salary costs including taxes (up to 25% of the previous year’s turnover in case of a justified exception or other exceptions if the loan term is

In summary, the current crisis measures are primarily targeted at those companies that officially paid wages in 2019 and did not have a deficit in equity at the end of the year. In addition, the negative impact of the current crisis on the company’s economic activities and an adequate exit plan must be clear. The current measures do not support start-ups and pending business plans.

If you have any questions regarding these measures or would like Finsa’s assistance in compiling financial plans and analyzing creditworthiness, or in communicating with banks or KredEx, please feel free to contact us. We are inspired by being able to help and support