Funding obstacles

This page lists Business Finland's obstacles due to which funding cannot be granted or the granted funding cannot be paid. A large part of these obstacles stem from the laws and decrees regulating 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.

What is a company in difficulty?

Make sure of these before financing and paying

  1. Check the backgrounds

    Make sure that your company, partner or procurement is not related to sanctions lists or freezing decisions.

  2. Take care of payments and obligations

    Take care of taxes, fees, loans and recoveries and that there is a payment arrangement in place for them. 

  3. Keep your business information in order

    Ensure that registrations, financial statements, auditing, and beneficiary information are in order. 

  4. Ensure an adequate financial situation

    The company must be solvent and self-financing sufficient.

  5. Provide correct and sufficient information

    Provide up-to-date information for reporting so that the financing can be paid.

When funding cannot be granted or disbursed

Sanctions and restrictions
  • The company has directly or indirectly made funds or economic resources available to or associated with the sanctions list to natural or legal persons, entities or bodies.
  • The tenderers, subcontractors or beneficiaries of procurements related to the project are subject to sanctions or freezing decisions imposed by the Finnish authorities.

Corporate Registration and Reporting Obligations
  • The company has not submitted a notification of beneficial ownership to the Trade Register.
  • The company has not submitted its financial statements to the Finnish 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 is not included in the prepayment register.

Fees, taxes and obligations
  • The company has uncompliant recovery decisions.
  • The company has arrears on previous Tekes or Business Finland loans.
  • According to the Tax Administration's information, the company has overdue taxes or payments for which no payment arrangement has been agreed.
  • The company has deficiencies in annual and tax returns.
  • The company has neglected its registration, notification or payment obligations related to other statutory obligations (VAT register, employer register).
  • The company has deficiencies in the employer's statutory insurances.
  • The company has failed to pay customs duties.

Obstacles to granting funding at the application stage

 Obstacles to granting funding (at application stage)

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

What we check before disbursement of funding in connection with reporting

In connection with reporting, we also ensure:

  • How the financial situation of the recipient of the financing has developed (company rating, payment defaults).
  • Has the recipient been subject to enforcement measures, liquidation, bankruptcy or restructuring proceedings?
  • Has the recipient provided sufficient information on the owners, beneficiaries or tenderers, subcontractors or their beneficiaries?
  • Is the information provided by the recipient sufficient to ensure that the funding is used in accordance with the funding decision and the terms and conditions of the funding?

Frequently Asked Questions

What is a company in difficulty

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

  1. It is a limited liability company that has lost more than half of its subscribed share capital due to accumulated losses.
  2. It is a general partnership or a limited partnership (or any other company in which the liability of at least some of the shareholders for the company's debt is not limited) and which has lost more than half of its own funds according to the accounts as a result of accumulated losses, or it fulfils the conditions laid down by national law for filing for bankruptcy or business restructuring proceedings at the request of creditors.
  3. The company has been placed in bankruptcy or business restructuring proceedings due to insolvency.
  4. The company has received a so-called rescue aid and has not yet repaid it, or has received restructuring aid and is the subject of a restructuring plan.
  5. In addition to the conditions set out above, large companies are also considered to be in difficulty in cases where, based on the two previous approved annual financial statements, both of the following conditions are met: the company's gearing has been above 7.5 and the company's EBITDA to net financial expenses ratio has been below 1.0.

If the company is less than 3 years old, the company is considered to be in difficulty only on the basis of section 3.

The difficulties of companies belonging to the group are examined from the perspective of the entity formed by Business Finland's client company and units under the same control. If the consolidated financial statements are not available, Business Finland will ensure that the prohibition on granting support to companies in difficulty is complied with in these cases as well.

Business Finland audits the company's equity at the time of the financing decision, also in the middle of the financial year. Even if the company was not in difficulty according to the previous financial statements, the equity situation is reviewed for the current financial year. 

Memorandum of the Ministry of Economic Affairs and Employment: Restrictions and definition of support for a company in difficulty in EU state aid rules.

What if a project funded by Business Finland fails?

Business Finland's project funding is paid if the project has been implemented in accordance with the objectives and the project plan. Business Finland's risk-taking means that the funded project may also fail. If a project for the implementation of which a loan has been obtained fails technically or its results are not realised as planned despite hard efforts, the loan can be applied for to be converted into a grant. This means that in this situation, you can apply for a debt collection for the loan. 

What does project funding mean?

Project financing refers to funding that is allocated to the activities defined in the project and does not include, for example, costs related to the company's normal business operations. Business Finland mainly funds projects, which means that the funding granted by Business Finland is usually allocated to development projects. 

Business Finland's funding is usually targeted at the development of products and services sold, but funding can also be granted for projects that create new business models. The amount of funding varies by financial service, but in general, Business Finland finances a maximum of 50% of the project's cost estimate. 

Memorandum of the Ministry of Economic Affairs and Employment

Limitations and definition of support for a firm in difficulty in EU state aid rules.