Updated 1850
Malta Chamber of Commerce welcomes interest rate subsidy
The Malta Chamber of Commerce welcomed the Government subsidy up to 2.5% of interest, on business loans related to the COVID-19 predicament, announced today. This measure, together with other measures announced previously such as the Government guaranteed loans and moratoria on loan repayments, many of which were proposed by the Malta Chamber, is appreciated as a step in the right direction and further support to businesses at this time of unprecedented challenges.
“Since businesses will still be expected to make good for a minimum of 0.1%, based on he discretion of the banks, the Malta Chamber calls on the latter to exercise maximum flexibility with businesses who are experiencing great credit-related hardships as in many cases, their revenue streams are drying out fast if not already. The Malta Chamber is available to provide assistance and facilitation between its members and the banking sector to iron out any issues that may arise.”
In its statement, the Malta Chamber further said that it shall continue to monitor the situation closely, as it remains in direct contact with its members – Malta’s foremost economic players – in order to provide Government with objective, researched and tangible recommendations and opinions, that will also drive a realistic and resilient exit strategy out of the current during and after the COVID19 pandemic.”
Updated 1653
Chamber of SME welcomes interest rate subsidies
The Chamber of SMEs welcomed the “positive support initiative” announced earlier by Government. The trade body said that the subsidy on interest rate will go a long way in making the Malta Development Bank Guarantee Scheme accessible and affordable for SMEs.
In its statement, the Chamber of SMEs said that “this scheme is being regarded as an important tool for business survival during the current crises and also an equally important tool that will reignite economic recovery.”
The Malta Chamber of SMEs also positively notes that a large number of banks are participating in the initiative.
We call on banks to make use of the subsidised interest rate and not charge any interest rate above that. We also expect for businesses not to be met with difficulty or bureaucracy and be provided with the finance facility in a timely manner. This should be the top-most priority. Paper work requirements should be reasonable. Flexibility should be provided to comply with such requirements within an agreed timeframe and should not delay access to the finance facility.
In the light of current economic constraints brought about by the spreading of the coronavirus pandemic, Government has announced that it will be subsidizing 2.5% of interest rates for loans taken out by businesses for the first two years.
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Parliamentary Secretary Clayton Bartolo announced that Government will be subsidising 2.5% of interest rates for the first two years. Self-employed and companies will therefore be covering a minimum of 0.1 percent. Therefore, if a bank applies an interest rate of 2.5%, Government will cover 2.4%. If the bank imposes an interest rate of 3%, the client will end up paying only 0.5% in interest.
This subsidy applies for the first 48 months of the loan. Businesses are encouraged to speak with their banks to benefit from this assistance. The participating banks are Bank of Valletta, HSBC, APS Bank, Med Bank, BNF Bank, Lombard Bank, Isola Bank and FCM Bank.
Government is costing this scheme at around 40 million euro.
These measures are over and above the guarantees being provided by the Malta Development Bank to cover loans which are used to pay salaries, payments for stock and material and payments related to cancelled or suspended contracts as well as maintenance expenditure. The guarantee covers 90% of new loans.
Bartolo described these measures as “positive and unprecedented”.
Minister for Finance Edward Scicluna welcomed the fact that the IMF, while comparing the current crisis with the Great Depression, has a significantly more positive outlook for Malta which he attributed to the trust in the Maltese Governments and the Maltese public.
Maltese individuals and clients have around 11 billion euro in existing loans with Maltese banks, for which the recently-announced moratorium applies. The new scheme applies for new loans.
Businesses have until June to apply for these loans.
