Plans to extend tax credit benefits to more SMEs

Small and medium enterprises will soon have easier access to finance following an agreement drawn up between Malta Enterprise and the European Investment Fund.

Unveiling three new schemes during a news conference, Investments Minister Austin Gatt also announced plans to extend tax credit benefits to more SMEs.

Pledging the government's support for SMEs, which account for some 99 per cent of all businesses in Malta, Dr Gatt urged all operators to be fully aware of the incentives on offer in order to balance out the massive risks normally undertaken to start a business.

Through the agreement, the EIF will be providing a counter-guarantee facility to Malta Enterprise (ME), which will act as an intermediary. ME will pay half the bank guarantees as loans to small enterprises, up to a maximum of €360,000.

The ME loan guarantee schemes for SMEs will support three initiatives - the Ta' Qali Crafts Village scheme, the loan guarantee scheme for new entrepreneurs and the SME loan guarantee scheme.

For the first, ME will support tenants at the Ta' Qali Crafts Village seeking a bank loan to finance the purchase of new workshops. Guarantees not exceeding Lm40,000 may be issued to cover up to half the bank loan required. Applicants are expected to make a contribution of at least 20 per cent of the capital expenditure involved.

Support will also be given under a loan guarantee scheme for entrepreneurs that are starting a business for the first time and that demonstrate an element of innovation. The guarantee amount may go up to Lm50,000 with a cover of up to 75 per cent for new tenants at the Kordin Incubation Centre or highly innovative start-ups.

Support under the loan guarantee scheme will be provided to SMEs that employ up to 100 persons and that are undertaking capital expenditure with a view to achieve growth, innovate or to internationalise their products.

ME is envisaging 87 projected applications for the Ta' Qali scheme, 28 for the start-up scheme and 60 for the SME loan guarantee scheme.

ME will not directly require collateral security for the portion of the loan it agrees to guarantee. The bank will charge a lower interest rate on the assisted loan.

Dr Gatt hailed the agreement as a perfect opportunity for ME to assist small enterprises to grow in an increasingly competitive environment.

He said it was high time for the government to extend the tax credits benefits that exist today for companies that employed five or fewer full-timers to companies that employed up to 10 workers.

The government also intends to eliminate the anomaly of including apprentices with the number of workers, which reduced the eligibility to tax credits.

Tax credits will also be given to those who invest in second-hand equipment, intellectual property, capitalised labour and industrial properties.