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Local small and medium-sized businesses (SMEs) are set to receive substantial support totalling €16.55 million through the ‘Malta Member State Compartment,’ the successor of the ‘SME Initiative Programme’.

This initiative falls under the umbrella of InvestEU, the European Commission’s programme designed to attract investments of at least €372 billion to address European Union policy priorities by 2027.

The aim behind the European Investment Fund (EIF)-backed InvestEu mandate is to establish an ‘SME Competitiveness guarantee instrument.’

“This new instrument is intended to replace the previously successful SME Initiative Programme, which, with an initial contribution of €29 million, facilitated the creation of a portfolio worth approximately €120 million, supporting over 1,000 SMEs in Malta,” the Government explained in a statement.

The ‘Malta Member State Compartment’ begins with an initial budget of €16.55 million, comprising €9.48 million from the European Regional Development Fund (ERDF) and €7.07 million from national resources through JEREMIE reflows, which is part of Malta’s Multiannual Financial Framework (MFF) allocation. This funding will be directed towards building a loan portfolio amounting to €60 million through the SME Competitiveness Guarantee Instrument.

The EIF investment through InvestEU is expected to have a significant impact on Maltese SMEs by enhancing their access to financing and improving financial conditions. This could lead to lower interest rates and reduced collateral requirements, making it easier for SMEs to obtain the necessary funding for growth and innovation.

This proposed mandate represents an expansion of the InvestEU programme, streamlining the implementation of model for third-pillar debt mandates. By leveraging the expertise and resources of the EIF, this partnership aims to unlock the full potential of Maltese SMEs, fostering innovation and job creation in the region.

“The instrument will give SMEs more access to finance, addressing the issue of limited access to finance by SMEs. This initiative also makes it more attractive to lending institutions like banks as it shares the risk burden due to the fact that the instrument covers a portion of the amount lent to SMEs, whereby banks can offer more competitive interest rates and longer-term repayments. In other words, it helps address the financing gap that many SMEs face so that they can stay ahead of the game and invest in innovation to meet today’s ever increasing technological advancements, boosting economic growth in the process,” said Minister for the Economy, European Funds and Lands Silvio Schembri.

On the other hand, Parliamentary Secretary for European Funds, Chris Bonnett added that with the help of EU Funds, “the Government is anticipating a positive impact on the financial landscape for Maltese SMEs whilst ultimately fostering an increase in innovation and job creation in the country.”

Marjut Falkstedt, CEO of EIF, commented on this development, stating, “Malta has been a pioneer in utilising EIF financial instruments since 2007, and this strategic partnership between EIF and Malta marks a pivotal moment in our ongoing support for the country’s SMEs. The positive outcomes achieved through the ‘SME Initiative Programme’ have exceeded our initial expectations. As we move forward, we are committed to continuing our support for Maltese SMEs to promote sustainable and inclusive growth in the country.”

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