EIF and Malta Ministry Collaborate to Inject €16.55 Million into Maltese SMEs

EIF and Malta Ministry Collaborate to Inject €16.55 Million into Maltese SMEs

(IN BRIEF) In a collaborative effort between the European Investment Fund (EIF) and Malta’s Ministry of European Funds and Lands, €16.55 million will be provided to support small and medium-sized businesses (SMEs) in Malta through the ‘Malta Member State Compartment.’ This initiative, part of the larger InvestEU program, aims to improve SMEs’ access to financing and financing conditions, potentially leading to lower interest rates and reduced collateral requirements. The funds will be used to create a loan portfolio of €60 million through the ‘SME Competitiveness Guarantee Instrument,’ replacing the previous successful SME Initiative Programme. This partnership seeks to boost innovation and job creation among Maltese SMEs, leveraging the EIF’s resources and expertise.

(PRESS RELEASE) LUXEMBOURG, 11-Oct-2023 — /EuropaWire/ —  The European Investment Fund (EIF), part of the European Investment Bank Group and established to support Europe’s micro, small and medium-sized enterprises (SMEs), and Malta’s Ministry of European Funds and Lands have embarked on a collaborative initiative aimed at bolstering the growth of small and medium-sized businesses (SMEs) in Malta. This strategic partnership has paved the way for a substantial financial injection totaling €16.55 million into the Maltese business landscape, under the banner of the ‘Malta Member State Compartment.’ This initiative follows in the footsteps of the highly successful ‘SME Initiative Programme’ and aligns with InvestEU, the European Commission’s visionary program striving to attract investments of no less than €372 billion by 2027, in line with European Union policy objectives.

The cornerstone of this EIF-backed InvestEU mandate is the establishment of the ‘SME Competitiveness Guarantee Instrument,’ poised to succeed the accomplished SME Initiative Programme. The latter, commencing with an initial investment of €29 million, catalyzed the creation of a substantial portfolio valued at approximately €120 million, providing crucial support to over 1,000 SMEs across Malta. The ‘Malta Member State Compartment’ kicks off with an initial budget of €16.55 million, comprising €9.48 million sourced from the European Regional Development Fund (ERDF) and €7.07 million contributed from national resources through JEREMIE reflows, an integral part of Malta’s Multiannual Financial Framework (MFF) allocation. These funds will be channeled into constructing a robust loan portfolio amounting to €60 million through the SME Competitiveness Guarantee Instrument.

The EIF’s investment through InvestEU is poised to have a transformative effect on Maltese SMEs, notably by enhancing their accessibility to financing options and optimizing financing conditions. This could translate into reduced interest rates and less stringent collateral requirements, ultimately simplifying the process for SMEs to secure the essential funding required for expansion and innovation.

The proposed mandate represents an expansion of the InvestEU program, streamlining the implementation model for third-pillar debt mandates. By harnessing the EIF’s extensive expertise and resources, this partnership aspires to unlock the full potential of Maltese SMEs, fostering innovation and job creation within the region.

Silvio Schembri, Minister for the Economy, EU Funds and Lands, said: “The instrument will give SMEs more access to finance, addressing the issue of limited access to finance by SMEs. This initiative also makes it more attractive to lending institutions like banks as it shares the risk burden due to the fact that the instrument covers a portion of the amount lent to SMEs, whereby banks can offer more competitive interest rates and longer-term repayments. In other words, it helps address the financing gap that many SMEs face so that SMEs can stay ahead of the game and invest in innovation to meet today’s ever increasing technological advancements, boosting economic growth in the process, said Minister Schembri.

Marjut Falkstedt, EIF CEO, commented on this development, stating, “Malta has been a pioneer in utilizing EIF financial instruments since 2007, and this strategic partnership between EIF and the Republic of Malta marks a pivotal moment in our ongoing support for the country’s SMEs. The positive outcomes achieved through the SME Initiative program have exceeded our initial expectations. As we move forward, we are committed to continuing our support for Maltese SMEs to promote sustainable and inclusive growth in the country.

Background information

The European Investment Fund (EIF) is part of the EIB Group. It supports Europe’s small and medium-sized enterprises (SMEs) by improving their access to finance through a wide range of selected financial intermediaries. The EIF designs, promotes and implements equity and debt financing instruments targeting SMEs. In this role, EIF fosters EU objectives in support of entrepreneurship, growth, innovation, research and development, the green and digital transitions and employment. In 2022, the EIF provided over €9 billion to finance small businesses and green projects, aiming to unlock around €97 billion in investment to promote climate neutrality, the digital transition of European industries and the competitiveness of EU entrepreneurs. Against the backdrop of challenging economic prospects for 2023, the EIF intends to make progress with the InvestEU programme, REPowerEU and other initiatives, such as the European Tech Champions Initiative.

The InvestEU programme provides the European Union with crucial long-term funding by leveraging substantial private and public funds in support of a sustainable recovery. It also helps mobilise private investments for the European Union’s policy priorities, such as the European Green Deal and the digital transition. The InvestEU programme brings together under one roof the multitude of EU financial instruments currently available to support investment in the European Union, making funding for investment projects in Europe simpler, more efficient and more flexible. The programme consists of three components: the InvestEU Fund, the InvestEU Advisory Hub and the InvestEU Portal. The InvestEU Fund is implemented through financial partners that will invest in projects using the EU budget guarantee of €26.2 billion. The entire budget guarantee will back the investment projects of the implementing partners, increase their risk-bearing capacity and thus mobilise at least €372 billion in additional investment.

Press contacts

EIF: Lorenzo Squintani | l.squintani@eib.org, tel.: +39 366 57 90 312
Website: www.eib.org/press — Press Office: +352 4379 21000 — press@eib.org

European Commission: Flora MATTHAES
Tel.: +32 229 83951
Email: flora.matthaes@ec.europa.eu

SOURCE: European Investment Fund