Market Gaps on Access to Finance - Bank of Valletta

6.3 Best practice examples
Following the market scope assessment, this sub-section discusses best practice examples in the use
of a wide array of financial instruments and various funding sources, as well as other related
considerations which could be taken into account in the local scenario as recommendations for the
BOX 6.3.1 Grant schemes
The need to address the financing gap structures in Malta through grant assistance will remain,
especially for those sectors / start-ups that have a high dependence/ necessity for such aid.
The grant process should therefore be made as effective and efficient as possible.
next programming period.
National/ EU-funded grant schemes will continue to remain a necessity for the local market. This is
especially the case for firms lacking the necessary initial collateral (especially start-ups) looking to
finance their initial stock and working capital. It is also needed for those local companies having a
low capital base, as well as those firms operating in sectors whose sustainability is often a challenge
(e.g. agriculture, fisheries). Moreover, due to the small size/ insularity of the Maltese islands, grants
are needed to finance internationalisation efforts that allow local firms to bridge this market gap
(e.g. export guarantee scheme).
There are various lessons learnt from the previous programming period. These include:
1.1 Greater access to EU funding – greater access and availability of funds, especially for
sectors such as tourism, digital gaming and the creative arts, and for projects related to
energy efficiency, exporting, and commercialisation of prototypes.
1.2 Application process - Open call system rather than time windows to speed up approval
times and provide greater certainty to the market. The approval process itself needs to
be streamlined and quickened.
1.3 Selection process - Careful selection process/ control mechanisms so as not to finance
distressed companies.
1.4 Disbursements - Faster refunding process to decrease cash flow pressure on SMEs.
Another option is the pre financing of projects, particularly for start-ups. This type of
bridge loan is already provided by some local banks. Pre financing could also be linked
BOX 6.3.2 Financial instruments
The JEREMIE loan guarantee product introduced in Malta has proven to be a success in terms
of take-up, effectiveness and efficiency in the use of resources. There is therefore scope for
more financial instruments, including loans and loan guarantees, equity guarantees, and
engineering instruments combined with grants.
with a bank guarantee to safeguard EU/ national funds.
The high dependence on bank financing and the lack of risk capital financial instruments in Malta
does not rule out any market scope for further financial instruments. The JEREMIE Malta product
has managed to successfully provide the local market with a product that combines bank financing
with a guarantee element, and a similar product (with potentially extended scope that extends the
eligible sectors) would be envisaged for the upcoming programming period. In line with a demanddriven
approach that takes into account the heterogeneity of the local SME population, there is also
potential scope to provide:
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