MDB to implement the interest rate subsidy scheme complementing the COVID-19 guarantee scheme

Earlier this month the Malta Development Bank (“MDB”) has launched the EU Commission-approved MDB COVID-19 Guarantee Scheme (the “Guarantee Scheme”), which mainly provides guarantees to commercial banks to facilitate access to bank financing to businesses established and operating in Malta (both, SMEs having up to 250 employees, as well as large enterprises with more than 250 employees), who are facing liquidity and cashflow problems due to the pandemic. The Guarantee Scheme mainly entails a fund of €350 million for the guaranteeing of loans granted by banks, which banks would in turn be able to leverage the Government’s guarantees up to a total portfolio volume of €777.8 million to support all types of businesses. For more information on the eligibility and features of the Guarantee Scheme visit the MDB website from the link below:

https://mdb.org.mt/en/Schemes-and-Projects/Pages/MDB-Working-Capital-Guarantee-Scheme.aspx

To complement the Guarantee Scheme, the Government has just announced a second measure to further alleviate terms relating to working capital loans extended by banks under the same Scheme. Through the Interest Rate Subsidy scheme (“IR Scheme”), which is also targeted towards businesses facing unprecedented disruptions due to the COVID-19 outbreak, businesses may avail themselves from a subsidy of up to 2.5% on the interest rate charged by banks during the first two years of working capital loans guaranteed by the Guarantee Scheme. The Malta Development Bank, appointed as the implementing body of the IR Scheme, is currently setting up the operational modalities in collaboration with the commercial banks and is working on the list of accredited commercial banks admitted for participation in the Guarantee Scheme, which list will be available on the MDB website.

MDB will shortly be providing more information on both schemes in an FAQ section which will be available on the MDB website. In the interim, interested businesses may contact MDB for further information via email on [email protected].