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Obstacles to granting and payment of funding

Each funding service's own page lists the requirements that must be met in order for Business Finland to grant funding to a project. This page lists obstacles identified by Business Finland that prevent funding from being granted or already granted funding from being paid out. Most of these obstacles stem from the laws and regulations governing Business Finland's funding activities. As a rule, Business Finland cannot grant funding to a company that is in difficulty according to the EU definition.

The following are obstacles to both the granting and payment of funding:

  • The company has directly or indirectly made funds or economic resources available or accessible to natural persons, legal entities, entities, or bodies on the sanctions list or close to them.
  • Suppliers, subcontractors, or beneficiaries involved in the project are subject to sanctions or freezing orders imposed by the Finnish authorities.
  • The company has not submitted a beneficiary notification to the Trade Register.
  • The company is not listed in the prepayment register.
  • The company has not submitted its financial statements to the Patent and Registration Office as required by the Limited Liability Companies Act.
  • The company's financial statements have not been audited in accordance with the Auditing Act.
  • The company has been removed from the Trade Register.
  • The company has non-compliant recovery decisions.
  • The company has arrears on previous Tekes or Business Finland loans.
  • According to information from the Tax Administration, the company has overdue taxes or payments for which no payment arrangement has been agreed.
  • The company has deficiencies in its annual reports and tax returns.
  • The company has neglected its registration, reporting, or payment obligations related to other statutory obligations (VAT register, prepayment register, employer register).
  • The company has deficiencies in its statutory employer insurance.
  • The company has neglected to pay customs duties.

When processing a funding application, obstacles to granting of funding also include:

  • The company is insolvent or has lost half of its share capital (definition of a Firm in difficulty later on this page).
  • The company does not have sufficient funding of its own.

When reporting on the project before paying out funding, we also make sure that:

  • How has the financial situation of the beneficiary developed (company rating, payment defaults)?
  • Has the beneficiary been subject to enforcement measures, liquidation, bankruptcy, or restructuring proceedings?
  • Has the beneficiary provided sufficient information about owners, beneficiaries or suppliers, subcontractors or their beneficiaries?
  • Is the information provided by the beneficiary sufficient for us to ensure that the funding will be used in accordance with the funding decision and the funding terms and conditions?

What is a firm in difficulty?

According to the EU state aid rules, a firm is in difficulty if at least one of the following five conditions is met:

  1. The company is a limited liability company that has lost more than half of its subscribed share capital due to accumulated losses.
  2. The company is a general or limited partnership (or other such company in which at least some of the shareholders' liability for the company's debts is not limited) and has lost more than half of its own assets due to accumulated losses according to the financial statements.
  3. The company has been placed into bankruptcy or restructuring proceedings due to insolvency, or it meets the conditions laid down in national law for being placed in bankruptcy or restructuring proceedings at the request of its creditors.
  4. The company has received rescue aid and has not paid it back yet, or it has received restructuring aid and is the subject of a restructuring plan.
  5. In addition to the above conditions, large companies are also considered to be in difficulty, if both of the following conditions are met based on two previous confirmed annual financial statements:
    • the company's debt-to-equity ratio has been over 7.5 and
    • the ratio of the company's operating margin to its net financing costs has been under 1.0.

If the company is less than 3 years old, it is considered to be in difficulty based on section 3 alone.

The difficulties of undertakings belonging to a group are examined in terms of the situation of the Business Finland's client company and the entity of undertakings under the same control. If a consolidated financial statement at the group level is not available, Business Finland ensures that the prohibition of aid to undertaking in difficulty is complied with in these cases as well.

Business Finland assesses the company's equity when deciding on the funding, including during a financial period. Even in cases where the company's previous financial statements did not indicate financial difficulties, the company's current equity as of the ongoing financial period is assessed.