Chamber of Commerce welcomes subsidy on business loans

Miguela Xuereb

The Malta Chamber of Commerce welcomed the government’s announcement that it will subsidy up to 2.5% of interest on business loans.

The government announced the new measure on Thursday as it continues to assist businesses financially in view of the coronavirus outbreak. Various financial measures have been announced over the past weeks including government guaranteed loans and moratorium on loan repayments.

Various stakeholders reacted positively to the news including the Malta Chamber of Commerce, the Malta Chamber of SMEs, the Gozo Business Chamber and the Gozo Tourism Association.

The Chamber of Commerce noted that many of the proposals it had put forward were taken up by the government and said that it was a step in the right direction.

The global pandemic has not only sparked a public health emergency but has had consequences on the global economy. Governments around the world continue to implement financial measures in a bid to stabilize the markets. Many have likened the effect of the coronavirus outbreak on the economy to the Great Depression.

The Chamber has called on the banks to exercise maximum flexibility with businesses who are experiencing credit-related hardships since their revenue streams are drying out fast.

The Chamber said that it was available to provide assistance and facilitation between its members and the banking sector to iron out any issues that may arise.

“An important tool for business survival”

The Malta Chamber of SMEs said that initiative will result in a very good facility which would have not been possible unless the government intervened.

“The subsidy on interest rate will go a long way in making the Malta Development Bank Guarantee Scheme accessible and affordable for SMEs.”

The Chamber of SMEs described the subsidy on business loans as an important tool for business survival during the current crisis as well as an important tool that will reignite economic recovery.

The Chamber of SMEs also took note of the number of banks which will be participating in the initiative.

“We call on banks to make use of the subsidised interest rate and not charge any interest rate above that. We also expect for businesses not to be met with difficulty or bureaucracy and be provided with the finance facility in a timely manner.”

The Chamber of SMEs said that the paper work requirements should be reasonable and that flexibility should be provided to comply with such requirements within an agreed timeframe and that there should be no delayed access to the finance facility.

“Positive steps to ensure businesses weather the storm”

The Gozo Business Chamber and the Gozo Tourism Association noted the new measure announced in a joint statement. The two organisations recalled that they had highlighted that the COVID-19 Guarantee Scheme launched by the Malta Development Bank was not enough to inject the required liquidity that would ensure businesses would survive in a previous press release.

Reacting to the news, the Gozo Business Chamber and the Gozo Tourism Association noted with satisfaction that the government had entered into the prerogative of guaranteeing 90% of the loans to businesses and covering 2.5% of the interest that is being charged by commercial banks for the first two years.

“These are positive steps which will ensure that Malta’s economy and its businesses will continue to weather the storm, and that they will be prepared to continue competing once this crisis is over,” the joint statement reads.

Both the GBC and the GTA positively note that their suggestions were taken on board providing better access to finance, and completing the fiscal and financial package that is being offered by the Government.

“The matter is now in the hand of the local Banks,” the two organisations said, adding that they are convinced that the local banks will shoulder with responsibility their duty to make funds accessible to local businesses at very low rates, given that the loans are government guaranteed.

The two organisations proposed that the arrangement fees are also waived.

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