Updated Overview of Assistance Measures for Companies

We have prepared an overview of the various measures the state is offering or will soon be offering to companies in order to alleviate the negative impact of the coronavirus on the economy. The additional measures of KredEx implemented from 7 May, have been added to the overview.

KredEx assistance measures

KredEx offers the following measures in order to support the companies who find themselves in difficulty as a result of the coronavirus:

• Extraordinary surety for new loans – if a bank is ready to grant a new loan or leasing, KredEx will give its surety to the extent of 90%.
• Extraordinary surety for existing loans – if a bank alleviates the payment schedule of an existing bank loan or leasing, i.e. allows for period of grace of up to 6 months (or if there is no payment schedule, extends the payment term), KredEx will provide surety for such loan.
• Extraordinary loan directly from KredEx – if banks refuse to grant turnover or investment loan or is prepared to grant it only under unreasonable conditions, KredEx will provide the loan to the company.
• Extraordinary surety for the hospitality sector, travel agencies and travel organisers – KredEx will grant surety to the extent of 100% for new loans and leasings, but up to 700,000 euros per entrepreneur. The surety can be applied for through banks from 7 May.
• Extraordinary surety for small loans – for companies with less than 50 employees and whose annual turnover is less than 10 million euros. KredEx will provide surety for new loans and leasings to the extent of 100%, but in the maximum amount of 100,000 euros per entrepreneur. The surety can be applied for through banks from 7 May.
• Extraordinary loan for projects of national importance – KredEx will grant a loan in the amount of starting from 10,000,000 euros per company. In order to receive the loan, the application must be accompanied with a proposal from the Minister of Foreign Trade and Information Technology to process the application as a project of national importance.
• Extraordinary surety for projects of national importance – KredEx will provide a surety for a loan or leasing from 10,000,000 euros per entrepreneur, but not more than 90% of the secured loan. Depending on the area of activity of the applicant, KredEx may provide a smaller surety. In order to obtain the surety, a bank should be contacted, who in turn will submit an application to KredEx.

More information on KredEx’s assistance measures and their conditions is available here.

Assistance measures of Company Estonia

• Assistance for partial compensation of losses of small companies. The aim of the assistance is to grant single non-returnable assistance for small companies (up to 49 employees) for partial compensation of loss from crises caused by the coronavirus outbreak. The amount of the assistance is 3,000 or 5,000 euros, depending on the company’s last year’s turnover and decrease in turnover. Company Estonia will open the application round in its e-service at the beginning of May. The assistance can be requested until the budget funds allocated for the measure (10 million euros) are used up. Conditions of the assistance are available here.
• Assistance for tourism sector companies. The assistance can be applied for by hospitality sector companies, travel companies, providers of tourism attractions or tourism services. The amount of the assistance is within 2,000 to 60,000 euros per entrepreneur. The conditions for the assistance and the amount of the assistance differ by the companies of the tourism sector. For example, accommodation and travel companies can apply for the assistance in the amount of up to 60,000 euros, restaurant and catering businesses in the amount of up to 30,000 euros. Company Estonia will open the application round in its e-service at the beginning of May. The assistance can be requested until the budget funds allocated for the measure (25 million euros) are used up. Conditions of the assistance are available here.

More information of the assistance measures provided by Company Estonia is available here.

Rental assistance for shops

The Government of the Republic has approved providing of rental assistance for shops that have been forced to close in the emergency situation declared during the coronavirus outbreak. The total volume of the measure is 3 million euros. At the moment the conditions for the assistance are being developed.

Assistance for acquiring state share

The Government of the Republic has approved the assistance measure for acquiring state share. The aim of the measure is to grant to companies who have suffered economic losses additional capital needed to exit the crisis period and allow them buy the shares back later. The target group of the measure includes companies who have an important economic impact on the state and exporters who pay the highest labour taxes. The total volume of the measure is 300 million euros. The recipient of the assistance is decided by the Government after reviewing each case separately.

Tax amendments

On 15 April, the Riigikogu passed a tax package the aim of which is to alleviate the negative impacts of the coronavirus on companies. By now, the majority of the amendments have entered into force.

• During the period from 1 May 2020 to 30 April 2022, the excise duty for fuel will be decreased. For example, the excise duty on diesel fuel will be decreased from 49.3 cents to 37.2 cents per litre. The state presumes that decreasing of the excise duty will decrease the price of diesel fuel by 14.5 cents per litre. The excise duty for natural gas will be decreased from 79.14 euros to 40 euros per 1000 m³. The excise duty for electricity will be decreased from 4.47 euros to one euro per MWh.
• From 1 March to the end of the emergency situation, interest is not calculated and does not have to be paid from tax arrears. After the end of the emergency situation until 31 December 2021, the overall tax interest rate will be 0.03 percent per day instead of 0.06 percent.
• Health insurance of members of the board and people employed under a contract according to the Law of Obligations Act (e.g. authorisation agreement, contract for services) is not interrupted during the emergency situation, if social tax to the extent of at least the minimum mandatory social tax obligation is not paid on their fee during the emergency situation.
• According to the amendment of the Social Tax Act, employers are required to pay social tax for March, April and May only on the payments made and not the least monthly rate. The amendment is beneficial for the employers whose employees are employed partially or are on unpaid holiday.

All tax amendments are available here.

Assistance measures of the Rural Development Foundation

The Rural Development Foundation has developed several measures aimed at alleviating economic difficulties arising from the coronavirus outbreak among the agricultural, food industry and rural companies (including accommodation, catering etc.). The measures include:

• loan surety for loans granted from commercial banks
• turnover and investment loan for overcoming liquidity problems caused by the coronavirus outbreak
• land capital loan for overcoming liquidity problems caused by the coronavirus outbreak.

More information on the measures provided by the Rural Development Foundation is available here.

Salary compensation from the Unemployment Insurance Fund

Employers can apply for the salary compensation from the Unemployment Insurance Fund in the amount of 70% of the average salary of an employee, but not more than 1,000 euros per month. In order to receive the compensation, the employer is required to submit an application to the Unemployment Insurance Find and meet at least two of the following conditions:

• The employer’s turnover in the month for which compensation is requested, has decreased at least 30% as compared to the turnover of the same month last year.
• The employer is unable to provide at least 30 percent of the employees work in the agreed volume and the employer is applying Section 35 or 37 of the Employment Contracts Act.
• Based on Section 37 of the Employment Contacts Act, the employer has decreased the salary of at least 30 percent of the employees by at least 30% or to the minimum salary rate.

More information on the salary compensation is available at the homepage of the Unemployment Insurance Fund.

Should you have questions on any of the assistance measures, contact the lawyers of the Chamber by writing to juristid@koda.ee.