22 February 2006

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Business Today

SMEs to benefit from new loan guarantee agreement

Bank of Valletta and Malta Enterprise last week signed an agreement through which BOV will be able support small and medium sized enterprises through the Malta Enterprise loan guarantee schemes including the Loan Guarantee Scheme for New Entrepreneurs and the SME Loan Guarantee Scheme.
The agreement, signed by John Soler, Chief Officer Credit of Bank of Valletta and by Philip Micallef, Chief Executive Officer of Malta Enterprise, underlines the strong co-operation that exists between BOV and Malta Enterprise. It follows the Business Strategic Alliance entered into by the two organisations in January 2006 wherein BOV became the official sponsor of the Innovation Projects of Malta Enterprise.
Speaking following the signing of the agreement, John Soler said that through this agreement, BOV customers may utilise the Malta Enterprise Loan Guarantee to support their financing requests made to the bank.
“BOV will be considering the Malta Enterprise Loan Guarantee as a prime security. As a result, that part of the finance covered by the Malta Enterprise Loan Guarantee will be extended at the most favourable rate of interest of just 1.75% over the base rate”, announced Soler. “Furthermore, since this guarantee is considered as prime security, the Bank will not ask the customer to provide additional security on that part of the loan which is covered by the Malta Enterprise Loan Guarantee. As a result, this arrangement will give more flexibility to the customer when seeking additional funding,” said Soler. “This is in line with our business philosophy of being supportive to our customers, taking a long term view of their requirements and working together towards their success,” concluded Soler.
Malta Enterprise CEO, Philip Micallef said, “Malta Enterprise is working closer with banks and other institutions to facilitate the access to finance for SMEs. The key objective of this co-operation is to help Maltese enterprises in improving their competitiveness. In this respect Malta Enterprise has also secured support from the European Union, particularly through the EIF (European Investment Bank) who have appointed Malta Enterprise as their local intermediaries.
The term of the Malta Enterprise loan guarantee extends over a period of seven years with the option, at Malta Enterprise’s discretion, to have it extended to ten years.
The specific features of the various schemes include:
- Loan Guarantee Scheme for New Entrepreneurs
This is a support scheme for corporate entities starting a business for the first time and those that demonstrate an element of innovation. The loan guarantee does not normally support any requests for start-ups in activities that are characterized by industrial over-capacity. Standard Loan Guarantees are issued for up to 50% of the required loan amount, however, this is capped at Lm40,000. On the other hand, new tenants at the Kordin Business Incubation Centre may also benefit by an improved and extended cover since the Loan Guarantee for New Entrepreneurs extends this cover to maximum 75% of the loan amount with a capping of Lm50,000.
- SME Loan Guarantee Scheme
Support scheme for corporate SMEs employing up to 100 employees and who are undertaking capital expenditure with a view to achieve growth, innovation or to internationalize their products. Whilst the guaranteed amount is negotiable with Malta Enterprise it would not exceed more than five times the issued share capital.
The Malta Enterprise Loan Guarantee Scheme seeks to facilitate the access to finance to small and medium sized enterprises by providing a loan guarantee in support of the customer’s banking requirements. The Loan Guarantee is partly counter-guaranteed by the European Investment Fund as part of the European Community’s Multiannual Programme for Enterprise and Entrepreneurship.

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