The Malta Development Bank (MDB) has just launched the MDB COVID-19 Guarantee Scheme (CGS). The CGS is a key component of the wider package of Government's COVID-19 Response Support Programme.

The Government has allocated a fund of €350 million for the MDB to develop the CGS, with the purpose of guaranteeing loans granted by commercial banks in Malta to meet new working capital requirements of businesses facing cashflow disruptions due to the effects of the COVID-19.

The Ministry for Finance entrusted the MDB as the implementing body of the CGS. The MDB is responsible for the development, management and implementation of the scheme. The CGS will enable the commercial banks accredited by the MDB to leverage the €350 million fund into €777.8 million in new working capital loans to support all types of businesses in Malta.

Eligible working capital costs under the CGS include salaries, rental costs, energy and water bills and fuel, unpaid invoices due to decrease in revenues, acquisition of material and stock for continuation of business, expenses directly related to contracts which were cancelled or postponed because of the present situation, and maintenance costs.

Businesses of any size and type can apply for loan amounts that can go up to €5 million, depending on the size, wage bill and turnover of the applicant.

Under the CGS, businesses can also benefit from improved access to liquidity, at lower interest rates and with a repayment period of up to six years.

In addition, the CGS will provide the much-needed breathing space for businesses by providing a six-month moratorium on both the interest payments as well as on capital repayments. The moratorium period can be extended by the commercial banks to one year on a case by case basis.

Prof. Josef Bonnici, Chairman of the MDB said: "All types of businesses are facing an unprecedented crisis with the COVID-19 pandemic. During these crucial times, the MDB is stepping in to help shield the Maltese economy, fulfilling its role as a counter-cyclical state instrument. The MDB has invested all its energy and resources in getting the CGS up and running as soon as possible since we understand that businesses are in urgent need of access to funding during these unprecedented times. As of today, the CGS is available for commercial banks to start mobilising the funds, ensuring that credit keeps flowing to where it is needed."