Market Gaps on Access to Finance - Bank of Valletta

6.3.6.1 Win-win loans - in Belgium it is possible for friends and family members of starter
entrepreneurs to receive a tax benefit if they extend a loan to the business for a period of
eight years. Initially it only applied to start-ups, but it has been extended to all SMEs, who
can gain access to a maximum of €100,000. This loan has worked extremely well in
Flanders, helping small businesses who need risk capital but cannot get a bank loan. Since
2006 this measure has assisted about 3,000 SMEs with a total of €98 million 134 . This
scheme is in principle similar to the Maltese Micro Invest scheme, but the tax credits would
be available not only for the businesses themselves, but also for the providers of finance.
The 2013 Budget Speech also announced the B.START initiative, giving a reduction in tax
up to a maximum of €30,000 on capital investment in new enterprise approved by ME 135 .
6.3.6.2 Credit mediation: Given SMEs find it hard to obtain the necessary funding from traditional
sources, Belgium and France appointed a “credit mediator” to intervene to ease difficulties
and help enterprises obtain bank funding. 136 This mediator acts as a “final referee” by
reviewing loan requests by SMEs and indicating how the request should be treated. In the
case of France, between November 2008 and February 2009, the rate of successful
mediation within 15 days was 66 %, while the main cause of referral to the mediator was the
need for short-term credit (69% of referrals) 137 .
6.3.6.3 Setting up a framework for PPPs: a number of Member States have utilised PPPs in which
special purpose vehicles are funded through both Structural Funds and commercial banks.
Such frameworks for PPPs need to be developed to attract this potential private lending into
a wider range of sectors eligible for EU funds 138 .
6.3.6.4 Development of a co-operative bank: In 2010, the European Parliament said the European
economy needed a sound network of regional and local banks like cooperative banks, since
they had a positive impact on GDP growth in most countries, and their internal deposit
guarantee schemes could withstand the shocks of a crisis. The latter is mainly due to very
tight bottom-up control mechanisms, leading to highly conservative investment decisionmaking.
Co-operative banks are a popular concept in Italy which mitigate credit-rationing to
certain market segments, particularly SMEs 139 . Some banks are consumer co-operatives,
others are worker co-operatives. In Malta, this concept was discussed in local fora,
addressing the possibility of developing such a bank locally, either through groups like
cooperatives setting up a bank, or a local institution converting to this model, or a local
institution establishing such a subsidiary 140 .
134
Lannoo (2013), Presentation to the Sectoral Sub-Committee on Growth and Competitiveness, 28 January 2013;
Flanders Today (2013), EU seals fate of win-win loan; European Economic and Social Committee (2012), Opinion – An action
plan to improve access to finance for SMEs, pg. 5, The EC is currently considering scrapping this measure on the basis of
discrimination and violation of the principles of freedom of movement and residence given that both the starter and supplier
of these loans must live in Flanders
135
Ministry for Finance (2013), Budget Speech 2013
136
OECD (2009), The impact of the global crisis on SME and entrepreneurship financing and policy responses centre
137
Ibid, pg. 35
138
Ibid, pg. 17
139
International Monetary Fund (2008), The reform of Italian co-operative banks: discussion of proposals. Apart from the
positive impact of co-operative banks, this paper also discusses potential issues related to the governance framework of
such institutions.
140
Times of Malta (2012), Co-operative bank could be ‘tonic’ for SMEs – minister; European Economic and Social Committee
(2012), Opinion – An action plan to improve access to finance for SMEs, pg. 7
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