Micro-loans offered to small businesses

Small businesses will now be able to get micro-loans to help them restructure or expand without the need for a business plan, thanks to a memorandum of understanding signed yesterday between the government and Bank of Valletta.

Bank chairman Joseph F.X. Zahra explained that small businesses have different needs from bigger entities and it was imperative to address such needs.

He said the micro-loans are directed towards small businesses employing up to 10 people. The loans are for a maximum of Lm5,000 and customers will need to contribute a minimum of 20 per cent of the value of the asset being financed.

Mr Zahra explained that over the last years the bank has committed itself to help small- and medium-sized enterprises. "We believe this sector needs to have services targeted directly towards it," he said.

Through the agreement signed yesterday between the bank and the parliamentary secretariat for the self-employed and small businesses, Bank of Valletta will be in a better position to identify those small business sectors that require financing, Mr Zahra said.

The bank will also be able to help small businesses comply with new EU regulations and assist them in their restructuring process, the chairman said.

Mr Zahra said the memorandum of understanding "provides a platform" for the bank to team up and work more closely with the small entrepreneur with the aim of helping him take full advantage of market opportunities.

A number of business sectors have been initially identified to benefit from the new financing option. These include butcher outlets that will be helped to conform to new legislation by upgrading their machinery as well as upgrading their premises, fish hawkers which require freezer vans to comply with new EU directives, retailers, boat builders and craft industries.

Parliamentary secretary Edwin Vassallo described the memorandum of understanding as a "small but significant development".

He said reports from EU countries show that access to finance was one of the biggest problems for small enterprises. The memorandum of understanding opened a window to help small enterprises make the necessary adjustments.

He said that once small enterprises do not need a business plan to be given the loan, bureaucracy will be reduced.

Through the agreement, Mr Vassallo was binding himself to consult with the bank and inform it about which self-employed sectors needed to be restructured.

Mr Vassallo said the bank will shortly be opening a new scheme for people working at the Ta' Qali Crafts Village. "We need to take care of the interests of the small enterprises which make up a big percentage of local businesses," he said.