Malta Enterprise launches scheme to aid enterprises with investments ‘not usually’ supported by banks

On Thursday morning (today), Malta Enterprise CEO Kurt Farrugia, together with Minister for Energy, Enterprise and Sustainable Development Miriam Dalli launched the latest business support scheme, known as Access to Finance (Soft Loan).

It is aimed at supporting enterprises to undertake necessary investments that are not normally supported by traditional banks, Mr Farrgia remarked at a press conference.

The soft loan scheme can be described as a financial instrument designed to support undertakings engaged in a manufacturing or service activity, accelerate their plans in establishing new products or entering a new geographic market, addressing environmental concerns and digitise processes.

Such enterprises may be supported through a soft loan covering part of the funding requirements of up to €1 million.

Who is eligible?

Enterprises registered as a limited liability company with the Malta Business Register (MBR) and are engaged in a manufacturing or service activity are eligible for the soft loan. In addition, to be considered for support, enterprises must meet the following criteria:

• No dues related to VAT, Income Tax and Social Security.
• Applicants must not be engaged in activities specifically excluded under the de minimus regulation
• Applicants must have at least one full time employee registered with jobsplus, who is also resident and pays income tax in Malta
• Applicants must not be subject to collective insolvency proceedings, nor fulfils the criteria under domestic law for being placed in collective insolvency proceedings at the request of creditors
• In the case of large undertakings, the beneficiary shall be in a situation comparable to a credit rating of at least B

What kind of investment will the soft loan cover?

Enterprises engaged in the facilitation of a development or expansion project based on a business plan prepared in view of developing a new product or entering a new geographic market will be eligible for a soft loan.

Additionally, undertakings addressing environmental issues such as water usage, water treatment, waste treatment, reduction and reuse activities are also eligible.

The scheme also counts for undertakings seeking to optimise business processes through digitalisation and advanced technologies, as well as for projects aimed to achieve a high level of sustainability.  

Any supported projects must have an implementation period no longer than 18 months, while the loan may cover up to 75 per cent of the costs related to the proposed project, including the procurement of assets, wage costs, know-how and other non-recurring costs.

The loan shall, by way of collateral, be secured by a special hypothec covering at least fifty per cent of the loan amount. The rest of the financing may come from a loan secured by the enterprise with a traditional bank, or through its own pocket by way of increased bank deposits as a result of delaying investments due to the pandemic.

The loan shall not exceed €1 million, or €500,000 for undertakings performing road freight transport and must be repaid over a five-year term.

An alternate arrangement can see the loan amount no exceeding €500,000, or €250,000 for undertaking performing road freight transport, and must be repaid over a period of 10 years.

Application process

Applications must be submitted prior to the commencement of the project while applications must be submitted through the ME website and through the ME’s client portal.

The applications shall be submitted no later than 31st October 2023.

More details can be found here.

During Thursday’s press conference to announce the scheme, Malta Enterprise CEO Kurt Farrugia said the agency has “been working on the scheme for months, to help businesses come out of the pandemic”.

He said that through consultations with stakeholders and company representatives, Malta Enterprise expects it to have “a very positive take-up”.

Minister Dalli, whose Ministry has Malta Enterprise included in its portfolio, thanked Mr Farrugia and his team for the work undertaken in the past months to see this initiative launched.

“This is an important step for companies in this crucial time…During the peak of the pandemic, Government had promised unprecedented assistance to the business community. Now, we need to incentivise investment to the same companies, so that they can come out of the pandemic stronger, and in a position to grow and diversify”, she said.

She said companies that make use of the scheme will continue to be more sustainable, efficient and competitive.

“Our ambitions do not stop at economic growth”, she added, remarking that Government wants “local business to invest in sustainable growth practices and social progress”.