Scheme Overview
The Guaranteed Co-lending Scheme (GCLS) offers larger financing solutions for businesses to support their growth aspirations.
This business loan involves co-lending between the MDB and commercial banks, splitting the lending equally. MDB provides a 60% guarantee on the commercial bank’s 50% share of each lending proposal.
Businesses will benefit from lower interest rates, reduced collateral requirements, and longer loan terms.
Loan amount between €1,000,001 and €10,000,000.
Maximum term of 15 years.
Minimum of 20% contribution of cash contribution to be covered by the business.
What can the MDB Co-lending Business Loan cover?
- New investments
- Realisation of new projects, penetration into new markets or new developments
- Capital expansions
- Support and improvement to the overall operations of the business
Applications are to be made either directly with the MDB or through the accredited banks: APS, BOV and HSBC.
Terms & Conditions | |
|---|---|
| Objective | To enhance access to bank financing for SMEs that, in spite of having viable projects, are unable to access the required bank finance for various reasons. The scheme addresses the following barriers to lending: (i) inadequate collateral; (ii) lack of credit history; and (iii) novel business market, sector or technology that is perceived by finance providers as higher risk under current credit risk evaluation practices. The GCLS caters for SMEs with larger loan requirements that exceed the maximum of €1,000,000 under the SME Guarantee Scheme. |
| State Aid | The GCLS will be implemented in line with the provisions of the De Minimis Regulation and the General Block Exemption Regulation (GBER) |
| Term of loans | The Scheme offers two types of loan tenors: with a maximum of 10 years and 15 years. The tenor of the loan determines the applicable state aid regime as follows: a) Up to 10 years – De Minimis b) Up to 15 years – GBER |
| Last date for inclusion of loans under the scheme | 31 December 2027 |
| Benefit pass-through | The benefit of the MDB guarantee shall be passed on to the final beneficiaries in the form of lower interest rates charged by the credit institutions, lower collateral requirements and a longer loan term. |
| Interest rates | The interest rate charged to the end beneficiary will be set by the credit institution. The MDB’s rate shall be lower than that of the credit institution. |
| Minimum loan size | €1,000,001 |
| Maximum loan size | €10,000,000 (depending on term of loan and choice of State Aid regime) |
| Borrower’s front contribution towards the project | Minimum of 20% upfront contribution. |
| Moratorium on capital repayments | Maximum 12 months from first disbursement date (at the start of the repayment period). A longer moratorium, but not exceeding 24 months, may be granted on a case-by-case basis subject to MDB approval. |
| Loan purpose / eligible costs | The projects financed under the GCLS must not have commenced before the sanctioning of the loan. Moreover, the GCLS cannot be used to refinance existing facilities held by the borrower. Eligible costs under the GCLS are: a) Cost of investment in tangible and intangible assets. b) Other investment-related working capital including the estimated wage costs of employment directly created by the investment project (subject to terms and conditions), calculated over a period of two years, subject to a maximum amount of not more than 20% of the total loan amount. In order to be considered an eligible cost, an investment shall consist of an investment in tangible and/or intangible assets relating to: ▪ the establishment of new enterprises, ▪ expansion capital, ▪ capital for the strengthening and/or stabilisation of the general activities of an enterprise, ▪ the realisation of new projects, penetration of new markets or new developments by existing enterprises, ▪ working capital related to the new investment, ▪ the acquisition of an asset belonging to another establishment, subject to terms and conditions as provided by the GBER regulation. |
| Eligible borrowers | The scheme is open to all SMEs in all economic sectors except the excluded and prohibited activities. Furthermore, SMEs active in sectors specifically excluded in Article 1 of the De Minimis Regulation, are ineligible. |
| Restricted and prohibited activities | Click here for the full list, found in Annex 1 of the Incentive Guidelines document. |
| Eligible borrowers | SMEs wishing to benefit from the Scheme shall apply at an accredited credit institution. The application submitted by the SME shall include the following information: a) undertaking’s name and size; b) description of the project, including its start and end dates; c) location of the project; d) list of project costs ; e) business plan and cash flow projections; f) recent financial statements. |
| Accredited credit institutions | APS Bank Bank of Valletta HSBC Bank Malta |
All relevant details and documentation for intermediaries can be found below.