Malta Government announced 2.5% Interest Rate Subsidy on Bank Loans to Businesses
In addition to COVID-19 Guarantee Scheme launched by the Malta Development Bank, Minister for Finance and Financial Services Prof. Edward Scicluna announced on the 16th April 2020 that the Government will be subsidizing interest rates on the working capital loans for two years and up to a maximum 2.5%.
Through the interest subsidy on bank loans, the Government intends to support affected businesses in responding to challenges and opportunities associated with the current COVID-19 pandemic. Enterprises from various sectors will benefit by this assistance as they will have more access to bank financing for the working capital funding necessary for their business operation. Those businesses who experienced sudden liquidity shortage during the outbreak will be primarily relieved by this assistance.
Details of the Scheme
In cases where in the interest rate charged by the bank is 2.5%, the Government will subsidise 2.4% while the borrower will be paying the minimum rate of 0.1%. However, if the interest rate is 3.5% thus exceeding the maximum threshold of the subsidy, the Government will pay out 2.5% while the borrower will pay the remaining 1%.
The assistance will be given to those who evidently need assistance and it is not for the purpose of providing property loans such as for the purchase of property but for assisting local businesses to survive during pandemic.
Government also announced the list of participating banks who constituted an agreement with the Government to assist local businesses in accessing the subsidy facilities. The interest rate subsidy will be available through Bank of Valletta, HSBC, APS, MeDirect, BNF, Lombard Bank, Izola bank, and FCM Bank.
Each bank will apply its own interest rate and applicants should pass the bank’s eligibility criteria.
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