The guarantee scheme is a key component of the wider package of the Government’s COVID19 response support programme and is aimed at guaranteeing loans granted by commercial banks in Malta to meet new working capital requirements of businesses facing cashflow disruptions due to the effects of the pandemic.

Malta Development Bank Chairman Josef Bonnici said: “All types of businesses are facing an unprecedented crisis with the COVID-19 pandemic. During these crucial times, the Malta Development Bank is stepping in to help shield the Maltese economy, fulfilling its role as a counter-cyclical state instrument.”

He said the development invested all its energy and resources in getting the guarantee scheme up and running as soon as possible as it understood that businesses are in urgent need of access to funding during these unprecedented times.

The guarantee scheme is available for commercial banks to start mobilising the funds, ensuring that credit keeps flowing to where it is needed, Prof. Bonnici stressed.

The development bank is responsible for the development, management and implementation of the scheme, which will enable the accredited commercial banks to leverage the €350 million fund into €777.8 million in new working capital loans to support all types of businesses in Malta.

Eligible working capital costs under the guarantee scheme include salaries, rental expenses, energy and water bills and fuel, unpaid invoices due to decrease in revenues, acquisition of material and stock for continuation of business, expenses directly related to contracts that were cancelled or postponed because of the present situation, and maintenance costs.

Businesses of any size and type can apply for loan amounts up to €5 million, depending on the size, wage bill and turnover of the applicant.

Under the guarantee scheme, businesses can also benefit from improved access to liquidity at lower interest rates and with a repayment period of up to six years.

In addition, the guarantee scheme provides breathing space for businesses by offering a six-month moratorium on both the interest payments and on capital repayments. The moratorium period can be extended by the commercial banks to one year on a case by case basis.