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Firms to repay Covid grants after admin mixup

Grants provided by regional economic development agencies, known as ELY Centres, were incorrectly calculated.

Suljettu ravintola-alue Espoon Tapiolassa.
Finland is to claw back some of the grants it paid to businesses in 2020. Image: Henrietta Hassinen / Yle

Businesses in Finland will have to repay grants received during the pandemic after a state agency admitted an administrative error.

Officials had included some business owner’s salaries in the grant calculation, against official guidelines.

The Centre for Economic Development, Transport and the Environment (ELY Centre) had provided subsidies to help small businesses of less than five employees survive the coronavirus crisis.

Yle spoke to two entrepreneurs, who cannot be named while the repayment process is ongoing, who said they were "appalled" at having to pay back some of the grant money.

"I would never have applied for that support if I had known what kind of loss I would make because of it," one entrepreneur from the South Karelia region told Yle, adding that the grant money had been received in the autumn and has already been spent.

Applications were not accurately processed

The ELY Centre has conceded that an error was made in the processing of applications, as officials mistakenly included the business owner’s salary as an acceptable cost to be covered by the grants.

"Of course this is terribly unfortunate, because the entrepreneurs' own salaries should not have been accepted there at all. But yes, there are some such cases," Head of the Finance Unit at Häme Ely Centre Sinikka Kauranen said.

The error occurred, Kauranen added, because some of the applications were processed by staff with little or no experience of handling such tasks.

"We had a number of processing staff who do not normally handle state subsidies. They probably didn't realise how accurate this has to be," Kauranen said.

The errors occurred in applications filed by sole traders, known as toiminimi in Finnish. These companies usually employ between one and four people and are the most common type of company in Finland, accounting for about 43 percent of all businesses.

The number of companies affected will only become clear later in the spring, but ELY’s lawyer Tero Ilvonen said the centres must proceed with the recovery of the subsidies.

"According to current legislation, we have no choice but to recover the share of the salary from the sole trading entrepreneur," Ilvonen said.

He added that instead of finding culprits to blame for the mix up, it would be more important to ask why business entrepreneurs are deprived of the opportunity to apply for a grant to pay their own salary in exceptional circumstances, such as the coronavirus pandemic.

Applicant: Advice was misleading

The South Karelian business owner interviewed by Yle described ELY’s error as "shocking confusion", and added that the incorrectly-awarded support money will lead to several thousand euros in loss of income.

The entrepreneur works in a tourism-dependent sector and employs 1-3 workers depending on the season. Last March, when business ground to a halt, applying for a business development grant from the Ely Centre seemed the only option.

The first application for support was returned with a request for further information. In order to write the second version, the entrepreneur requested help from an ELY adviser.

"The ELY adviser called for the share of my salary to be entered in the application as well. They then reviewed the entire application in collaboration with their colleague, and it was processed," the business owner said.

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