Overview: State aid schemes for entrepreneurs and growth businesses

5.14.2020

A number of new initiatives aimed at helping Danish businesses through the COVID-19 crisis are primarily targeting entrepreneurs and growth businesses. This news article provides you and your company or investment fund with an overview of aid schemes generally available to entrepreneurs and growth businesses.

The schemes include:


  • Special match-funding from the Danish Growth Fund
  • Enlarged pool for the Innovation Fund Denmark
  • Advanced payment of tax credits
  • Repayment of paid VAT as interest-free loans
  • New compensation scheme for freelance workers
  • Compensation scheme for fixed costs of enterprises
  • Temporary salary compensation
  • Guarantee scheme for corona loans to small and midsized companies
  • Guarantee scheme for small and midsized companies with export activities
  • Temporary crowdfunding platform

Special match-funding from the Danish Growth Fund

Many entrepreneurs and growth businesses have seen private investors pull out of the market or postpone agreed loans or equity financing, and most startups struggle for bank loan approvals. To address those needs, a Growth Fund relief package has been set up, containing the below four initiatives targeting startups and growth businesses. All of the loans are open for application now and must have been agreed by the end of 2020. 


  • COVID-19 Startup loan
    - Loan in the amount of DKK 0.4 million to 2 million 
    - Aimed at startups which have a fully-developed product ready for commercial use, have successfully closed their first sales to customers, or have promising indications of sales possibilities. 
  • COVID-19 Syndicated loans
    - Loans in the amount of DKK 1 million to DKK 5.95 million 
    - Aimed at startups which already have investors on board. The loan facility allows businesses to supplement investments from investors with a loan from the Danish Growth Fund. 
  • COVID-19 Business Angel loans
    - Loans in the amount of DKK 0.25 million to DKK 12 million 
    - Aimed at startups receiving an investment from a Business Angel approved by the Danish Growth Fund, typically at pre-seed or seed stage. 
  • COVID-19 Investor loans
    - Loans in the amount of DKK 0.25 million to DKK 20 million 
    - Aimed at startups receiving an investment from a Business Angel approved by the Danish Growth Fund (venture fund, family office or EAF angel), typically a more mature startup (rounds A onwards). 


All loans come with a term of six years and interest at Cibor 3 months + 5%. Interest will also be supplemented by an exit arrangement. The loans have co-financing requirements and the Danish Growth Fund requires security for the loans. The borrower must not have been in difficulty as at 31 December 2019. The Danish Growth Fund processes applications for approval of business angels and other investors continuously. More details are available in our news article dated 12 May 2020, and further information is available at the Danish Growth Fund’s website, which is already open for loan applications.

Enlarged pool to support innovation projects via Innovation Fund Denmark

Innovation Fund Denmark has received an additional DKK 350 million to be granted to innovative and knowledge-based projects through the Fund’s Innobooster programme. The programme targets SMEs and startups. With the added funds, the Innobooster’s aggregate pool this year has more than doubled, now holding DKK 650 million, and the programme will show increased risk appetite, and financing will be more easily obtained. Entrepreneurs who have already received an investment through Innovation Fund Denmark’s startup programmes in 2020 will be able to apply for additional grants.

Innovation Fund Denmark has announced a number of specific initiatives to benefit from the Innobooster pool of funds. They are, among other things:


  • Greater risk appetite and enhanced financing for more market preparation activities under the Fund’s Innobooster programme.
  • Financing of new hires and retention of R&D/knowledge personnel among knowledge-based startups.
  • Enhanced interaction between Innovation Fund Denmark and the Danish Growth Fund in respect of startups and SMEs.


Eligible businesses must apply for grants to innovative and knowledge-based projects at the Innovation Fund Denmark website.

Advanced payment of tax credits on R&D activities

Businesses eligible to receive the tax value of the part of their loss that is attributable to R&D activities (tax credit) in connection with the final tax assessment will get this payment for 2019 advanced from November 2020 to June 2020. The maximum annual payment is the tax value of DKK 25 million, which with a corporate income tax rate of 22 % results in an enterprise being eligible to receive payment of up to DKK 5.5 million per year. 

It is a condition for payment of tax credits in June 2020 that:


  • the enterprise must have suffered a loss in the 2019 accounting period;
  • the loss must relate to R&D activities;
  • the enterprise must apply for advanced payment of tax credits;
  • the application must be accompanied by an audit opinion.

Repayment of VAT as interest-free loans, and extension of time limits for VAT payments

To strengthen the liquidity of small and medium-sized businesses, such businesses which as of 20 March 2020 had paid VAT for the second half or fourth quarter of 2019 can apply for repayment of the VAT amounts as interest-free loans. The application must be filed no later than 15 June 2020, and the loans must be repaid no later than 1 April 2021. 

In addition to the chance of receiving the paid VAT as interest-free loans, businesses may also postpone payment of VAT for the current VAT periods. 
More details are available in our news article dated 12 May 2020.

New compensation scheme for freelance workers

A compensation scheme has been launched for freelance workers who earn both A income (income taxed at source) and B income (not taxed at source) and who expect an income loss of at least 30 % as a consequence of the COVID-19 crisis. The scheme allows the target group to receive compensation of up to 90 % of their expected A or B income loss during the period compared to the same period last year up to a maximum of DKK 20,000 per month. 

The compensation is available in the period from 9 March until and including 8 July 2020. Enterprises and freelance workers, etc. must apply for compensation on virk.dk. Additional information can be found in our news article dated 12 May 2020 and will be published on the business portal of the Danish Business Authority: virksomhedsguiden.dk. 

Compensation scheme for fixed costs 

Businesses across any sector can apply for compensation for fixed expenses incurred in the compensation period from 9 March to 8 July 2020, if the business is anticipating a revenue loss of at least 35% as a result of the COVID-19 outbreak or is subject to a ban on opening and has no revenue during such closure. The business' total fixed expenses during the compensation period must exceed DKK 12,500, and an application must be filed electronically no later than 31 August 2020.

The proportion of fixed expenses covered by the scheme varies from 25% to 100% depending on the company's anticipated revenue loss and whether the business has been subject to a ban on opening. A negative result in the preceding financial year will reduce the compensation proportionately to the size of such result. 

Additional information can be found in our news article on compensation for fixed expenses

Temporary salary compensation

Companies that have been hit particularly hard by COVID-19 can apply for salary compensation for employees who have been or will be sent home in the period from 9 March to 8 July 2020. The salary compensation scheme applies to employees of all private enterprises, which would need to dismiss at least 30% of all employees or more than 50 employees. Several rules apply to the use of the scheme, most importantly that employees who are sent home must receive full pay, but are not allowed to work during the period, and that the enterprise cannot dismiss any employees for economic reasons during the compensation period. The compensation scheme can be combined with an agreed cut in wages. 

The salary compensation is as follows:


  • Salaried employees: The compensation is 75% of the employee's salary up to a maximum of DKK 30,000 per month.
  • Non-salaried employees: The compensation is 90% of the employee's salary up to a maximum of DKK 30,000 per month.


Additional information can be found in our news article on the salary compensation scheme

Temporary crowdfunding platform

The creation of a national platform in cooperation with private crowdfunding platforms is intended to make it easier to raise donations and reward-based contributions via crowdfunding. Being a temporary solution, the platform will be in place until year-end 2020.

Guarantee scheme for loans to small and midsized companies

To help fill the liquidity gap, a guarantee scheme has been implemented to back bank loans for small and midsized companies. A guarantee under the scheme covers 70% of a financial institution's exposure under the loan.

A company which meets the following criteria is eligible for a guarantee under the scheme regardless of its line of business:


  • The company must be registered with the Danish Business Authority (CVR) or the Faroe Islands Business Authority (Skràseting Føroya)
  • The company must be a 'small or midsized company' as defined by the EU, meaning that it must satisfy one or more of the following criteria: (i) less than 250 full-time employees, (ii) net revenue of less than EUR 50 million, and/or (iii) annual balance sheet total of a maximum of EUR 43 million
  • Realised or expected loss of revenue of at least 30% caused by the COVID-19 outbreak over a minimum period of 14 days from 1 March 2020 to 30 September 2020
  • The company must be creditworthy


The guarantees for small and midsized companies are issued and administered by the Danish Growth Fund (Vækstfonden). Guarantees under the scheme are applied for through a financial institution, which in turn applies on the Danish Growth Fund's website. The Danish Growth Fund cooperates with all Danish banks and financial institutions. 

Guarantee scheme for SMEs with export activities

A guarantee scheme has been announced for small and medium-sized companies whose export activities are affected by COVID-19 to improve their chances of getting a loan. A guarantee under the scheme covers 80 % of a financial institution's exposure under the loan.

A company which meets the following criteria is eligible for a guarantee under the scheme:


  • The company must be registered with the Danish Business Authority (CVR) or the Faroe Islands Business Authority (Skràseting Føroya)
  • The company must be a 'small or midsized company' as defined by the EU, meaning that it must satisfy one or more of the following criteria: (i) less than 250 full-time employees, (ii) net revenue of less than EUR 50 million, and/or (iii) annual balance sheet total of a maximum of EUR 43 million
  • Exports must represent at least 10 % of the company's annual revenue
  • Realised or expected loss of revenue by at least 30 % caused by the COVID-19 outbreak.