A  bank guarantee scheme to help businesses get through the COVID-19 pandemic has been extended until June, the Malta Development Bank said on Tuesday. 

The extension to June 30 has been approved by the European Commission, which also gave the MBD permission to modify scheme provisions, allowing commercial banks to extend loan periods in “exceptional cases”. 

Commercial banks can now extend loan terms to 96 months, inclusive of the moratorium period, instead of the 72 months previously permitted. In such cases, guarantee fees will be applied retrospectively. Such term extensions are at commercial banks’ discretion, the MDB said. 

Extensions are also applicable to MDB’s COVID-19 Interest Rate Subsidy Scheme, whereby applicants can still benefit from a grant of up to 2.5 percentage points on the interest payable on scheme loans for the first two years of the term.

Launched in April 2020, the COVID guarantee scheme leverages a €350 million government guarantee to provide commercial banks with liquidity to pump credit into the local economy. 

The scheme was originally due to lapse in December 2021. 

Through the scheme, the MDB guarantees 90% on new working capital loans granted by commercial banks. Wages, rental costs and utility bills all qualify as working capital under the scheme’s terms.

The MDB says this capital relief has enabled a portfolio of up to €777.8 million in new working capital loans to all businesses, regardless of size or sector. Businesses that require such financing can apply for loans through one of the nine commercial banks accredited as part of the scheme.