13 businesses took out loans of over €2m each to survive COVID-19

13 companies took out loans of over €2million under the Malta Development Bank’s COVID-19 Guarantee Scheme in order to survive the pandemic


13 companies took out loans of over €2million under the Malta Development Bank’s COVID-19 Guarantee Scheme in order to survive the pandemic, BusinessToday has learned.

In fact, just over 5% of the 251 businesses that benefited from the scheme needed massive loans to cover wages, overheads, regular maintenance and recurring expenditure.

78 businesses took out loans ranging between €250,000 and €2million.

The MDB Guarantee Scheme was launched at the height of the coronavirus pandemic and covers 90% of each working capital loan to businesses whose cash flow has been impacted by the COVID-19 outbreak.

By the end of June, 251 businesses had benefited from a lifeline of €200million in additional liquidity from local banks backed by the MDB’s scheme.

Because of the scheme, commercial banks could provide otherwise-unavailable working capital loans with reduced collateral requirements, highly subsidised interest rates on loans, as well as a moratorium on repayment of both capital and interest.

BusinessToday is informed that the absolute majority of companies supported through the scheme - or more than 90% - were small and medium enterprises.

The hospitality sector, which was probably the hardest hit during the pandemic, secured the largest value of sanctioned loans, with more than 25% of the total volume. The wholesale and retail sector followed by more than 22% of the portfolio.

Businesses in the construction, transport and storage and the manufacturing sectors also took out loans under the scheme.

With reference to the size of loans granted, 64% of applicants took out loans of less than €250,000. 31% of successful loan applications were for €250,000 to €2million, while the rest

More than 31% obtained, through the guarantees provided by this scheme, loans ranging between 250,000 euro and €2million, while the remaining 13 businesses were granted loans of more than €2million each.

The MDB scheme allowed these businesses, regardless of their size and their economic sector, to obtain the necessary liquidity to cover salaries, rental payments, utility bills and other payments of an immediate nature. The money borrowed could not be used for new projects.

Prof. Josef Bonnici, chairman of the MDB’s board of directors, said that despite Malta’s success in dealing with the health aspect of the pandemic, the impact of the pandemic on businesses was inevitable.

‘Through the guarantee schemes managed by the MDB, we have ensured that business owners are supported in their efforts to be resilient through these challenging times while most importantly safeguarding the jobs these companies support,” he said.

“At the same time, we are also making it easier for the banks to continue providing new loans which will be crucial in supporting the economy not only to survive but to regenerate itself and deliver growth in the months ahead.”

It is estimated that the Malta Development Bank Covid-19 Guarantee Scheme alone has helped safeguard more than 15,000 jobs thus far.

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