As citizens across the Nordics and Baltics practice social distancing to tackle the spread of Covid-19, startups are worrying about the rising economic uncertainty that comes with a pandemic. The United Nations (UN) has warned that the outbreak could cost the global economy $1 trillion this year alone, while tech leaders from venture capital funds, like Sequoia and Angular Ventures, are providing advice to startup founders about how to weather the crisis.
Governments across the Nordics and Baltics are actively taking measures to tackle the challenges the Covid-19 pandemic has created for startups, addressing concerns about running out of cash, not being able to pay off debt and what to do with staff left idle. To make startups aware of what their government can do for them, we have created a country-by-country roundup of government-backed resources in the Nordics and Baltics for startups and scaleups dealing with the consequences of the Covid-19 crisis.
Due to the constantly changing nature of the Covid-19 disease – this list is only a snapshot of the current initiatives and measures continue to be announced.
The state will provide a guarantee of 70% via the Danish state’s investment fund, Vækstfonden, for new bank loans to companies which have suffered or expect to suffer a revenue loss of at least 30% as a result of COVID-19. The scheme can support lending to small and medium-sized enterprises for up to DKK 25 billion.
EKF Denmark’s Export Credit will provide guarantees for loans to Danish export companies affected by the crisis. Schemes are already available to SMEs and will soon be available to larger companies as well. In total, the scheme will be able to support loans for approximately DKK 8.5 billion. With the SME scheme, the state provides EKF with a guarantee of 80 per cent of the banks’ new loans to export companies who have suffered or expect to suffer a revenue loss of at least 30% as a result of the spread of the coronavirus.
A central government loan guarantee has been proposed to make it easier for companies to access financing. The proposal means that the central government will guarantee 70% of new loans banks provide to companies that are experiencing financial difficulty due to the COVID-19 virus but that are otherwise robust. The guarantee will be issued to banks, which in turn will provide guaranteed loans to companies. The loan guarantee primarily targets small and medium-sized enterprises. However, there is no formal limit on company size to take part in the programme. The Swedish National Debt Office will administer the guarantee and it is proposed that each company be allowed to loan up to SEK 75 million, although exceptions can be made.
The government-owned investment fund, Almi Företagspartner AB, will receive a capital contribution of SEK 3 billion to increase its lending to small- and medium-sized businesses throughout the country. For more information see the
A temporary reduction of employers’ social security contributions will be proposed for the period 1 March to 30 June 2020, so that only the old age pension contribution is paid. It is proposed that this reduction should apply to up to 30 employees and on that portion of the employee’s wage that does not exceed SEK 25 000 per month. This entails tax relief of up to SEK 5 300 per employee and month.
Business Finland is providing business development funding for small and mid-sized Finnish companies affected by the crises. Companies can use the funding to carry out development plans in order to improve their potential for success during and after the disruption caused by the coronavirus. The funding provided by Business Finland has a maximum value of €100,000. To be eligible, the company has to be a Finnish-based SMEs with 6-250 employees and mid-cap companies with a maximum turnover (own or group) of €300 million.
Finnvera, a specialised financing company owned by the State of Finland, is guaranteeing bank loans for SMEs hit by the Covid-19 crisis. Finnvera is offering two different solutions: the Start Guarantee and the SME Guarantee, The Start Guarantee is for companies which have been operating for a maximum of three years, and it may cover up to 80 percent of a bank loan. The SME Guarantee is directed to companies which have been operating for more than three years may cover a loan of maximum EUR 150,000.
Tesi, a government owned investment firm, has set up a temporary Covid-19 program to avoid mid-cap companies going into bankruptcy. . The investment from the temporary program will be made following an expedited process and the size of the investments will be EUR 1-10 million. To qualify for the investment a mid-cap company must have a turnover exceeding EUR 10 million, have at least 50 employees, and have been a commercially viable business before the crisis (and the means for commercial viability must remain).
The Centre for Economic Development, Transport and the Environment is awarding grants to SMEs which have been the subject of exceptional market and production disruptions as a result of the coronavirus. This is a discretionary state grant that can be awarded to a company that employs a maximum of five people at the time of application. The aid is available to SMEs in all other sectors, with the exception of the sectors excluded from the aid by law, which are agriculture, fisheries and forestry, and the processing and marketing of agricultural products.
Innovation Norway grant money has been increased from NOK 0.7 million to NOK 1.5 million. Grants are aimed at entrepreneurs and start-ups with innovative business ideas that have market and growth potential but reduced access to equity. The grants are meant to stimulate product and service development, facilitation of development activities and projects, and the creation of corporate networks.
The availability of loans from Innovation Norway has been increased to NOK 3 billion. Innovation loans can be used for part-financing of investment projects dealing with start-up, innovation, restructuring, internationalisation and development. An increased lending limit will provide loans to companies with great potential that will not be able to meet their financing needs in the market, even with the state’s risk relief to the banks.
Private innovation and entrepreneurial environments, such as co-working spaces and incubators, are in a very vulnerable position. Revenue depends on rental income from businesses that themselves have experienced problems due to the crisis, and many of these environments are in danger of going bankrupt. In order to help these environments so that they can maintain their offerings to start-up and growth companies, a subsidy scheme of NOK 50 million is proposed.
The government proposes to increase the investment capital of Investinor, the investment company funded by the Norwegian government, by NOK 1 billion to improve access to capital for early stage companies. The measure will stimulate private capital to continue to create and develop new profitable jobs in the future. Investinor can contribute to this through its new mandate for matching investments, which is currently being developed.
The KredEx Foundation, a state-owned financing institution, has taken several measures to support startups during the Covid-19 crisis. The measures will include emergency loan guarantees for new loans, which cover a maximum of 90% of the loan. The target group of KredEx includes all Estonian companies, except for the exclusions regarding fields of activity that were already in effect.
KredEx is offering a similar guarantee scheme to relax repayments of existing loans. If the bank relaxes the repayment schedule for an existing bank loan not backed by KredEx, or is willing to issue a new loan to the undertaking, KredEx will give its guarantee to that loan.
If a positive solution is not reached in the previous steps, the companies will also be able to apply for an extraordinary loan from KredEx. All Estonian companies can apply for a loan up to 5 million. The loan is aimed at overcoming the temporary difficulties caused by the outbreak of COVID-19. Refinancing of existing loans is generally not allowed. Servicing of existing liabilities (except for owner loans) is permitted.
One of the ideas that was made a reality as a result of the Covid-19 hackathon Hack the Crisis is Share Force One – a workforce sharing platform that connects B2B sides for temporary workforce exchange. Share Force One works in partnership with Estonian Unemployment Insurance Fund. The solution is live and free to use to all of Estonia’s businesses.
Businesses affected by the Covid-19 crisis can apply for loans issued by ALTUM, a state-owned financing institution. The financing is available to SMEs, as well as large enterprises, including in the agricultural and fisheries sector.The value of the loan is up to EUR 1 million and will be granted if the company is economically viable and able to prove that the support is necessary because of the Covid-19 impact, as well as that the additional financing will help the company recover and successfully continue its business operations.
SMEs can also apply for a bank loan holiday guarantee. The guarantee will cover 50 percent of the financial service (balance at the moment the guarantee is granted). The guarantee will be granted if the company is economically viable and its credit institution has confirmed that the liquidity support is necessary as a result of the Covid-19 impact. It is meant for all business branches, at the same time taking into consideration sectorial support restrictions set by the government (for example, gambling, finance brokerage, arms trade, etc.)
Lithuania’s investment fund, INVEGA, will guarantee banks and other financial institutions, including leasing companies, for execution of loans already granted and new loans. Loans that can be guaranteed include investment loans granted (including leasing transactions), working capital loans (excluding reverse leasing transactions) where restructuring took place after 16 March 2020 and new working capital loans (including reverse leasing transactions) to support corporate liquidity. The guarantees are available to small, medium-sized and large companies. Up to 80% of the loan principal can be guaranteed up to a maximum of EUR 1.5 million.
INVEGA plans to provide (via financial institutions) loans for companies to maintain liquidity. The measure is targeted at small and medium-sized enterprises and large enterprises operating in the most affected sectors. The size of the loan will be limited to the amount needed to cover the company’s necessary expenses. Loans will be provided on a monthly basis.
INVEGA plans to provide direct loans to small and medium-sized enterprises whose activities were banned during the quarantine period. Loans can be granted if companies cannot obtain financing in the market.
As part of its Covid-19 stimulus package, the Government has placed strong emphasis on investment and on strengthening societal infrastructure. Plans have now been expanded, with an expedited investment initiative. The scope of the initiative is 20 bn.isk with 15 bin.ISK financed by the Treasury and 5 bn.isk. by public companies. Special consideration is given to projects that can be expedited and to other profitable projects that can create a variety of jobs at short notice. The investments are in areas such as road construction and maintenance, real estate, and information technology. Furthermore, contributions to various scientific and innovation funds will be increased.