EISA says that the new system will be easier for firms to use, while qualification expectations are more lenient compared with those of previous start-up grant initiatives; though the objectives that are attached to the grant conditions must certainly be met nonetheless.

EISA spokesperson Egert Puhm said: "Having access to capital is crucial when starting a company, taking a loan without collateral, for example, but this can be difficult to obtain. In return for its grant, the state expects functioning companies which pay salaries and earn sales revenue."

The Ministry of Economic Affairs and Communications sees the main goal of the program being to boost entrepreneurial activity, particularly in rural areas, Puhm added.

The grant is funded by the European Structural and Investment Funds (ESIF) and can be applied for at any time until the overall financing budget of €5 million gets exhausted.

EISA has said that the new conditions for entrepreneur start-up grants are simpler; for example, there is no longer any need to prove expenses in using a grant, meaning it can be utilized according to individual needs.

Companies up to three years in age and which create at least one full-time equivalent job within three months from the grant decision, paying the minimum wage or more, are eligible for the grant.

The option exists for several part-time jobs created to constitute together one full-time position.

The bulk of the grant, €15,000, is payable following the decision and the creation of the workplace.

The remaining €5,000 will be paid at the end of the grant period, two years later, provided that that full-time job or its equivalent job remains in place.

The business owner must also contribute a minimum of €5,000.

A company's sales revenue must reach a growth rate which differs by region.

In Tallinn and Tartu, the figure is €80,000, whereas it is half that for the rest of the country.

Puhm also cited a study conducted by the University of Tartu and Tallinn University of Technology (TalTech) on the effectiveness of entrepreneurship and innovation grants between 2014-2020, which found that providing grants to start-up companies should continue in the future, as it allows for quicker investments necessary for development.

The study found that providing a larger start-up or development grant for equipment purchase is vital, as it enables the creation of new jobs in, for example, Northeastern Estonia.

Manufacturing companies that used start-up grants did so for product development and export growth, the study found.

In addition to this grant, they had leaned on other supports and services but not financial instruments due to the conditions of funding offers.

Puhm said: "Unfortunately, there is no newer study exactly along these lines, so some aspects may have become outdated – for example, the grant conditions have changed, but the broader impact side is transferable."

If the required job is not created or sales revenue is not achieved within the specified time, the grant must be repaid.

Companies interested must undergo pre-advisory routines and obtain a preliminary assessment from the local county development center to apply for the grant.

Preparing a business plan and financial forecasts is also a requirement.

--

Follow ERR News on Facebook and Twitter and never miss an update!