No support is given to medium and large enterprises that were experiencing financial difficulties before the coronavirus pandemic. Section 2-5 third paragraph of the Regulation sets out the rules that apply when an enterprise is to be considered to have been experiencing financial difficulties.
To make this assessment, you will need the annual accounts for the most recent financial year with a balance sheet date falling before 1 March 2020.
If the accounts show that total equity accounts for less than half of the enterprise’s subscribed share capital and premium, the enterprise will not be eligible to apply for grants.
In the case of large enterprises, you will need figures from the annual accounts for the more recent two financial years with a balance sheet date falling before 1 March 2020.
If the most recent accounts show that total equity accounts for less than half of the enterprise’s subscribed share capital and premium, the enterprise will not be eligible to apply for grants.
The enterprise will also not be able to apply for grants if the accounts for both of the last two financial years indicate that total debt is more than 7.5 times total equity and that the ratio of EBITDA to net interest expenses is less than one.
EBITDA is gross operating profit, i.e. earnings before interest, taxes, depreciation and amortisation.
Groups experiencing financial difficulties
The condition in Section 2-5 third paragraph stipulating that medium and large enterprises must not have been experiencing financial difficulties before the pandemic must be met both by the applicant enterprise and collectively by the group as a whole; see Section 3-4 sixth paragraph. The conditions concerning minimum equity, debt ratio and EBITDA-interest coverage ratio must be calculated on the basis of annual financial statements with a balance sheet date before 1 March 2020.
If the enterprise is part of a group that prepares consolidated financial statements, the consolidated financial statements must be used. This applies even if changes occurred in the composition of the group between the balance sheet date for the consolidated financial statements and the grant period, and even if the applicant enterprise did not become part of the group until after the balance sheet date for the consolidated financial statements. If the enterprise is part of a foreign group, the consolidated financial statements prepared by the foreign parent company must be used in the same way as for a Norwegian group.
In the absence of consolidated figures, the figures from the annual financial statements from the enterprises included in the group in accordance with Section 1-6 must be aggregated, albeit with the right to implement eliminations. See Innovation Norway’s Guidance on the EEA Agreement’s state aid rules, section 4.2.2.