Housing allowance and basic social assistance for entrepreneurs

As an entrepreneur, you are entitled to the general housing allowance under the same conditions as anyone else.

When you are an entrepreneur, Kela determines the amount of income you have received in the current year based on your YEL or MYEL insurance. This means that the actual income you have obtained from your business as wages, dividends and other earnings is not significant in assessing your need for housing allowance.

If your business operations are in small scale, you do not necessarily have a YEL or MYEL insurance. In that case, Kela interprets such benefits as start-up grant as income or estimates your income on the basis of the information in the Incomes Register.

You may start a company even if you are receiving basic social assistance for your necessary everyday expenses. However, Kela requires you to provide a statement of self-employment income. You cannot receive social assistance to protect your company against business risk or cover business expenses. Basic social assistance is the last option to secure your income. Therefore, before establishing a company, you should find out whether you are entitled to a start-up grant, for instance.

If you have already started a company and are seeking basic social assistance, Kela will determine your company’s profitability. From the perspective of social assistance, business activity is considered unprofitable if the entrepreneur does not earn a sufficient income from their full-time business activity over a longer period of time. If an entrepreneur can earn around the same amount from their business activities as they would receive when unemployed, this is regarded as a sufficient income.

If Kela finds that your company is unprofitable, you will typically receive basic social assistance, and you will be allowed a time period during which you must try to make your business profitable or wind it down. If you fail to get your affairs in order during this period, the amount of basic social assistance provided to you may be reduced and Kela will refer you to your social services.