The European Investment Fund has signed a guarantee agreement with Bank of Valletta that will allow the bank to provide over €50 million of new loans to Maltese small and medium-sized enterprises (SMEs), including micro-businesses.  

The agreement brings a new instrument, the First Loss Portfolio Guarantee (“FLPG”) to the Maltese market.

The instrument offers a new opportunity to a broad range of SMEs across Malta (including Gozo) looking to invest or expand their business. Bank of Valletta will offer improved loan conditions to businesses by reducing collateral requirements and reducing interest rates. The product as been available for SMEs as from 6 April and will facilitate SMEs’ access to finance.

The guarantee is implemented under the JEREMIE (Joint European Resources for Micro to Medium Enterprises) initiative, financed from EU Structural Funds.

Commenting on the agreement, EIF Deputy Chief Executive Jean-Marie Magnette remarked: “The EIF is pleased to be signing the first JEREMIE agreement to benefit Maltese businesses less than a year after the signing of the funding agreement. This new financial product will allow an increase in lending volumes to local businesses at better terms, including micro-loans and start-up finance. Thus, JEREMIE in Malta not only benefits SMEs but also the Maltese economy as a whole.”

BOV CEO Tonio Depasquale said: “Bank of Valletta is very proud to be appointed as the Maltese financial intermediary for the management of the JEREMIE initiative. We will be using this programme to further promote growth, innovation and renovation amongst SMEs, with particular attention to micro SMEs and start-ups for the benefit of the Maltese economy at large.”

Finance Minister Tonio Fenech also welcomed the scheme, commenting: “The Maltese economy is recovering well and in 2010 experienced one of the highest growth rates in the EU, together with a significant drop in unemployment. However, we need to sustain this momentum and small businesses play an important role in achieving this objective. Through this scheme, we are facilitating access to new investment which supports business growth, innovation, and increase in renewable technology while creating further job opportunities in a wide range of sectors of the economy.”