The PN is currently accepting €10,000 loans as part of its new Skema Cedoli, an effort to cancel out party debt. Photo: Jason Borg

The Nationalist Party will be accepting loans for less than €10,000 in order to open its funding initiative up to more people, Anne Fenech, the President of the party executive council, said.

The PN is currently accepting €10,000 loans as part of its new Skema Cedoli, an effort to cancel out party debt that will see loans repaid in 10 years with a four per cent annual interest rate.

Dr Fenech told the Times of Malta that the original €10,000 amount was only the first step and the party would be creating similar structures for the public to lend it smaller amounts.

“As we go along we will be opening this scheme up,” she said, adding that €10,000 was too steep for some.

Dr Fenech said the scheme had been developed after the party received numerous proposals for loans from the public. Following a financial consolidation, the party was now in a position to offer interest and was confident of its ability to repay the loans.

This is the way parties should be financed, it shouldn’t be payback time once elected

It was too soon to say how much had been generated through the scheme but Dr Fenech said the response had been very encouraging.

The Malta Financial Services Authority told this newspaper that while the activity of lending was licensable in terms of either the Banking Act or the Financial Institutions Act, this was only required if it was carried out on a “regular or habitual basis”.

This meant that loans could only be made to the party once per individual without requiring a licence.

Dr Fenech said this was not much of an issue as the party did not expect repeat loans from party supporters.

While shying away from referring to the scheme as a form of “crowd funding”, Dr Fenech said the use of small loans from the public was nothing to be ashamed of.

On the contrary, this was “a more honest” way of financing political parties as the commitment to the lender was clear: interest and repayment, not political favour.

She said the public would no longer tolerate a situation where political organisations were handed large sums of cash by third parties only to win favour with the government once elected.

There was no way the Labour Party had funded its 2013 election campaign using fund-raising marathons, and this was showing in the way the country was being run, she said.

“This is the way parties should be financed today, it shouldn’t be payback time once elected,” Dr Fenech said.

She did not say whether the PN was considering proposing legislation for this model to become the standard form of party financing, however, the Party Financing Act was a good piece of legislation to weed out those who seek to buy influence in political parties.