Subsidised Loans Scheme (SLS)

Subsidised Loans Scheme (SLS)

Scheme Overview

The MDB Subsidised Loans Scheme (SLS) is the first emergency support measure as part of a package in response to the Ukraine crisis. In order to ensure food security in the wake of the war in Ukraine, the MDB is committed to assist importers and wholesalers to stock reserves of wheat and animal feeds for a longer period than normal. Such abnormal stock piling at the prevailing higher prices required substantial liquidity at short notice. The MDB was appointed by the Government to take immediate remedial action by providing urgent liquidity support in the form of direct subsidised loans to the major grain importers.

Through the SLS the MDB provides temporary urgent liquidity support to ensure national security of strategic supply to companies undertaking the importation and wholesale of grains including but not limited to animal feeds and related products, affected by the current crisis following the invasion of Ukraine by Russia.

Under the SLS the MDB will be providing subsidised loans directly.

Information to Beneficiaries

A total loan portfolio of up to €30 million is being made available by MDB directly to grain importers, backed by a government guarantee of 90%. The term of the loans shall be that of a maximum of two years. The loans shall be covered by a maximum interest rate subsidy of 2% subject to a minimum interest payment by the borrower of 0.1%.

Terms & Conditions

Scheme

Subsidised Loans Scheme (SLS)

Objective

To offer temporary urgent liquidity support to ensure national security of strategic supply to undertakings engaged in the importation and wholesale of grains, including but not limited to soya, barley, alfalfa, maize, wheat and other pre-mixes utilised in the manufacturing of feeds for various types of animals as well as wheat and flour for the production of bread, pasta and other basic foodstuff, affected by Russia’s war in Ukraine and the consequent economic impact.

Structure

The MDB is to provide urgent liquidity support in the form of a direct subsidised loan.

Type of facility

Working capital loan to finance the bulk importation of the eligible commodities.

Eligible costs

Urgent liquidity needs for working capital purposes related to the importation of strategic reserves of grains including but not limited to soya, barley, alfalfa, maize, wheat and other pre-mixes utilised in the manufacturing of feeds for various types of animals as well as wheat and flour for the production of bread, pasta and other basic foodstuff.

The scheme shall not cover restructuring or rescheduling of existing facilities held with the commercial banks or with other related parties to the undertaking. The scheme shall not cover overdue creditors whose overdue amounts are not related to the current crisis

Eligible enterprises

All business undertakings established and operating in Malta that are:

  1. SMEs (within the meaning of Commission Regulation (EU) N°651/2014 of 17 June 2014 as amended, restated, supplemented and/or substituted from time to time) and 
  2. large enterprises 
Aid under this scheme shall not be granted to undertakings under sanctions adopted by the EU, including but not limited to:
  • persons, entities or bodies specifically named in the legal acts imposing those sanctions;
  • undertakings owned or controlled by persons, entities or bodies targeted by sanctions adopted by the EU; or 
  • undertakings active in industries targeted by sanctions adopted by the EU, insofar as the aid would undermine the objectives of the relevant sanctions.

State aid

The GCLS will be implemented in line with the provisions of the European Commission’s Temporary Crisis Framework to support the economy in context of Russia's invasion of Ukraine (OJ C 131 I/1, 24.3.2022).

Last date for inclusion of loans

Up to 31 December 2022.

Total Portfolio Volume

€30,000,000.

Maximum loan amount

The maximum individual loan amounts are: 

  • 15% of the beneficiary’s average total annual turnover over the last three closed accounting periods; or 
  • 50% of energy costs over 12 months preceding the month when the application for aid is submitted; or 
  • With appropriate justification and based on self-certification by the beneficiary of its liquidity needs, the amount of the loan may be increased to cover the liquidity needs from the moment of granting for the coming 12 months for SMEs and for the coming 6 months for large enterprises.

The liquidity needs already covered by​ aid measures under the Covid-19 Temporary Framework shall not be covered by SLS.

Term of loans

Maximum 2 years.

Interest rates

The loans shall be covered by a maximum interest rate subsidy of 2.0% subject to a minimum interest payment by the borrower of 0.1%. The MDB has fixed its annual interest rate at 2.0% for SMEs and 2.25% for large companies. 

After considering the interest rate subsidy quantified in the Table below, the ultimate beneficiaries under SLS shall be charged annual interest rates as follows:

 

1st year

2nd year

SMEs

10bps

35bps

Large

25bps

65bps

Guarantee

Each loan under this scheme shall be covered by a guarantee of 90% issued by the Government of Malta.

Initial processing fee

The MDB shall charge an initial one-time processing fee of 0.2% on the sanctioned amount. This fee shall be collected upon acceptance of the facility letter by the borrower.

Moratorium on interest and capital repayments

A maximum moratorium of 6 months with the possibility to extend to one year on a case-by-case basis. The moratorium period applies to capital repayments. During the moratorium period the interest on the loan is to be paid on a monthly or quarterly basis, as may be agreed between the MDB and the borrower.

Security / Collateral

To be considered on a case-by-case basis.

Application process

The MDB shall provide the loans directly to the beneficiary for the purpose stated. 

Proposals are to be assessed by the MDB in line with the MDB’s credit policy and procedures criteria.