Market Gaps on Access to Finance - Bank of Valletta

Malta Business Bureau – <strong>Market</strong> gaps in access to finance
April 2013
2.4.2 Malta Enterprise support measures
Malta Enterprise (ME) has been active in providing assistance to Maltese firms. In conjunction with
the launch of the SBA in Malta, a one-stop shop was set up in 2012 to provide enterprises with
access to 50 different government services. This business support centre, named Business First, is
hosted at ME. In addition, ME has assisted SMEs through a mix of tax credits, loans, grants and a
number of “access to finance” support measures (co-financed through the EU and/or national
funds), including:
Investment tax credits (Jan 2008 – Dec 2013) - credits are available to selected sectors 16
and provide tax credits to support investment and job creation, focusing on attracting new
investment projects and promoting expansion or diversification of existing enterprises. The
tax credits are calculated as a percentage of either the investment undertaken or the wage
costs of new jobs directly created as a result of an investment project, with the applicable
percentages for SMEs ranging from 40% (medium) to 50% (small).
Soft loans (existing aid) – soft loans support enterprises through loans at low interest rates
for part financing investments in qualifying expenditure, on the basis that the activities of a
qualifying company 17 may contribute to the development of the Maltese economy as per the
objectives of Government. The assistance represents up to 75% of qualifying expenditure,
capped at €2.3 million, with minimum interest chargeable of 2.5% below the ECB base rate.
Loan interest subsidy (existing aid) – this tool aims to help increase the competitiveness and
innovative capacity of enterprises by supporting the acquisition of tangible and intangible
capital assets that lead to a more effective and efficient production and supply of service/s.
The maximum loan is capped at €7 million, with maximum interest subsidy of 3% on the
bank lending rate. The same eligible qualifying companies as per the soft loans support
measure apply.
Loan guarantees (existing aid) – these guarantees facilitate access to finance to assist
enterprises in the acquisition of capital assets that will lead to a more effective and efficient
production and supply of service/s. The assistance can represent up to 75% of a loan taken
up by a qualifying company to finance qualifying expenditure, and is capped at €2.3 million.
Again, the same eligible qualifying companies as per the soft loans and loan interest subsidy
support measures apply.
Interest rate subsidy for hotels, accommodation facilities and restaurants (Oct 2010 – Dec
2013) - this scheme supports hotels, restaurants and holiday accommodation providers in
upgrading their operations and product offering so as to provide new and improved services.
These investments are necessary to enhance the competitiveness of such enterprises and
upgrade the tourism sector. Such assistance is capped at €630,000 in the case of hotels,
guesthouses and hostels, and €45,000 in the case of snack bars, restaurants and
farmhouses. The interest rate subsidy varies from 1% to 3%.
Energy efficiency loans (May 2011 – Dec 2013) – this scheme relates to soft loans (up to
€400,000 covering up to 80% of the total eligible project costs) granted to hotels,
guesthouses, hostels, farmhouses, snack bars and restaurants to implement energy saving
solutions and to invest in solutions for the generation of energy from renewable non-fossil
energy sources. The loan period is limited to five years and the applicable interest rate is
1.5% over the discount rate charged by local commercial banks.
Equity Financing Programme (2009) – investor readiness programme to support local
businesses with the development of their business proposals and to help with their initial
investor search 18 .
Tax credit for the development of digital games (2013) – a one-time tax credit equivalent
to 100% of the total subcontracted costs incurred for the development of an eligible digital
game, up to a maximum of €15,000 19 .
16 All enterprises engaged in manufacturing, ICT, R&D, eco-innovation and waste treatment, biotechnology, audiovisual
productions, tertiary education in science and technology, private healthcare services, logistics operations by undertakings
that create 50 new jobs (FTE), and that include part-transformation that adds value to the product.
17 All qualifying companies engaged in manufacturing, industrial services, biotechnology, call centre activities and R&D.
18 Times of Malta (2009), Equity financing for expanding companies
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