The Malta Development Bank will be deploying €150 million in liquidity to help local businesses that have been hit by a supply chain crunch and the Ukraine invasion tap bank credit.

Dubbed the Liquidity Support Guarantee Scheme (LSGS), the scheme is the second emergency liquidity support measure introduced through the MDB in response to the Ukraine crisis.

The first measure was in support of grain imports. 

The LSGS consists of two measures - one applicable all firms affected by the crisis (LSGS-A) and the other specific for fuel and oil importers (LSGS-B).

A total of €100 million will be made available for the first scheme, with an additional €50 million in liquidity provided for the second.

LSGS-A is aimed at all sectors of the economy and all types of businesses, irrespective of size. It will enhance access to bank financing for companies with cash flows that have been adversely impacted by disruptions in supply chains and other pressures brought about by the Ukraine crisis.

LSGS-B will focus on fuel and oil importers and is geared towards ensuring security of the strategic supply of the fuels. 

Both measures are guaranteed by the MDB and backed by a government guarantee covering 90% of LSGS-A loans and 80% of LSGS-B loans.

Loans given under both facilities will benefit from an interest rate subsidy of up to 2.5 percentage points on the outstanding amount of the working capital loan, subject to a minimum interest payment by the borrower of 0.1%.

That subsidy is applicable during the first two years of the loan, starting from the date money is first disbursed.

Loan terms cannot exceed six years and the maximum loan amount will be determined on a case-by-case basis based on turnover, energy costs and liquidity needs. Both measures are available until the end of the year.

To qualify for these subsidised loans, firms are required to demonstrate, in a clear manner, that their cash flow has been adversely and directly affected by the aggression against Ukraine.

Businesses will be able to apply for the loans through banks and credit institutions that will soon be accredited by the MDB.

The list of credit institutions will be made available on the MDB website, along with more details on both measures.