Bank of Valletta is the first bank to sign up to the Malta Development Bank’s Small Loans Guarantee Scheme, a facility designed to support smaller businesses seeking access to finance.
In a statement, the MDB said that it expected a number of other commercial banks to follow suit.
The SLGS seeks to support smaller businesses in their bid to access credit facilities up to €250,000 for working capital. It was purposely designed to address one of the main barriers to finance for start-ups and SMEs: high collateral requirements.
In light of this, the scheme allows smaller businesses to source loans under the MDB’s Covid-19 Guarantee Scheme without the need to provide high personal guarantees. The MDB provides additional protection to banks, which in turn reduce collateral requirements to a maximum of 20% of the loan value.
The scheme will apply retroactively: if an eligible business has already concluded loans with a participating bank, it can renegotiate the previously-submitted security under the terms of the SLGS.
Since the launch of the Covid-19 Guarantee Scheme, the MDB has supported over 400 business with loan facilities reaching more than €285 million.
“We are very pleased with the take-up of Covid-19 related assistance so far; through the additional incentives being provided to the smallest businesses and the self-employed we are making sure that the Bank can truly reach out and support every entrepreneur, whatever the size of the business, to play a role in Malta’s economic regeneration,” MDB chairman Josef Bonnici maintained.
He emphasised that the fund available for the guarantee scheme was far from exhausted.
“We must strive to continue reaching out and supporting local businesses. To this end, we encourage local entrepreneurs to approach their preferred commercial banks, to seek help and learn more about these attractive schemes,” Bonnici concluded.