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Malta Development Bank incentives for SMEs

    The Malta Development Bank (MDB) was set up by the Government of Malta with the strategic objective of offering financing facilities that support productive and viable operations where the market is unable or unwilling to accommodate such activities on its own in whole or part. 

    Currently the MDB offers promotional schemes that are specifically designed for:

    1. SMEs particularly those involving innovation, digitalisation, and the preservation and enhancement of competitiveness;
    2. Socially-oriented initiatives, particularly those involving knowledge generation, education, health and social inclusion;
    3.  Energy efficiency initiatives.

    Facilities are mainly extended through intermediaries, namely commercial banks, that conduct the due diligence process and project appraisal. These intermediaries assess and approve loan applications of end-customers under promotional schemes pre-agreed with the MDB. The facilities can take the form of portfolio guarantees, co-financing or a combination of both.

    The MDB has implemented two facilities particularly interesting for SMEs which might not otherwise be accommodated by the private sector intermediaries despite the social desirability of their activities or revenue generating potential. These are:

    • Guarantee Facility for loans to SMEs, and
    • Tailored Facility for SMEs

    Guarantee Facility for Loans to SMEs

    The purpose of the MDB Guarantee Facility is to assist SMEs, including start-ups, by enhancing their access to bank finance. Eligible SMEs benefit from:

    • enhanced access to credit as insufficient collateral and lack of credit history should not remain an obstacle when seeking finance from the banking sector,
    • better terms and conditions and a longer repayment period,
    • lower interest rates as a result of the credit risk protection from the MDB’s guarantee.

    The facility is available through commercial banks that agree to act as implementing partners of the MDB. In turn, the Implementing partners benefit from:

    • Lower credit risk exposure;
    • Enhanced opportunity to increase the size of the balance sheet and profitability;
    • Efficient use of capital and lower impairment charges to the profit and loss;
    • Greater flexibility in adhering to the risk appetite framework;

    Terms of the Facility

    • Eligible loans guaranteed under the facility range from a minimum of €10,000 up to a maximum of €750,000.
    • The maximum term of loans is 10 years including the moratorium period if any.
    • Possibility of a 12-month moratorium on capital repayments (at the discretion of the commercial bank)
    • The minimum contribution by the SME is normally 10% of the project costs (at the discretion of the commercial bank)
    • The commercial bank may require collateral in addition to MDB’s guarantee to cover the exposure.

    Tailored Facility for SMEs

    This facility offers a bespoke solution for SMEs with investment plans that exceed the €750,000 mark. The structure of the facility can take the form of co-financing with commercial banks and may also include an element of guarantee by the MDB. The facility can be calibrated in line with the characteristics of the proposed investment. It is designed to address the following major barriers to lending:

    • Insufficient value or type of collateral;
    • Innovative business ventures, economic sectors or technologies which fall outside the risk appetite and tolerance of commercial banks;
    • Other factors for which commercial banks may not be willing or able to provide the required financing in whole or part.

    The terms of the facility are as follows:

    • The required loan is co-financed by the commercial bank and the MDB in such portions as may be agreed between the parties.
    • The size of the loan ranges from a minimum of €750,000 to a maximum of €5 million.
    • The minimum term of the loan is 24 months. The maximum term depends on the life-time of the asset being financed, to be agreed on a case by case basis.
    • On a case-by-case basis, the MDB may offer a guarantee on part of the commercial bank’s share of the loan. 

    What type of projects are eligible for these facilities?

    • The project must be supported by a viable business plan.
    • The project is considered bankable by the credit institution, meaning that the business is reasonably expected to generate sufficient cash flow to enable timely repayments.
    • The project is not physically completed or fully implemented on the approval date of the facility; and
    • The activities of the SME are not in the list of excluded activities laid down in the guidelines.

    Bridge Advice can be your point of contact with the MDB and assist you with obtaining these facilities so that you may fulfil your investment plans and growth ambitions. Find out more about our services at or contact us on