Covid-19 Guarantee Scheme (“CGS”)
As a major component of the Government’s Covid-19 response support programme, the Malta Development Bank (“MDB”) has been allocated the responsibility of developing, managing and implementing the € 350M guarantee scheme after the European Commission’s approval.
This fund is being granted to guarantee loans by commercial banks in Malta in order to meet new working capital requirements of Maltese businesses facing cashflow disruptions due to the Covid-19 outbreak. The CGS will allow MDB accredited commercial banks to leverage the fund into € 777.8M in new working capital loans to support all types of businesses.
SMEs and small enterprises are allowed a maximum individual loan amount of up to € 2M while large enterprises are allowed up to € 5M. Any amounts higher than the threshold shall require prior ad hoc approval by the MDB.
The guarantee scheme shall be intermediated via commercial banks in Malta and all relating applications are to be assessed by the respective bank in line with their credit policy criteria. Final approval rests with the commercial bank when falling within the above threshold.
Businesses can ultimately benefit from improved access to liquidity at lower interest rates and with repayment period of up to 6 years. A 6-month moratorium to businesses on both interest payments and capital repayments may be applied with the possibility of it being extended to 1 year.
Eligible working capital includes:
- Employee salaries;
- Rental costs;
- Energy, water and fuel expenses;
- Unpaid invoices (due to decrease in revenue);
- Acquisition of material and stock for the continuation of business;
- Expenses relating to cancelled or postponed contracts; and
- Maintenance costs.
The MDB is stepping in to help shield the Maltese economy and provide liquidity to businesses in these uncertain times.
Contact us for more information on how your business may benefit from the CGS.