Backed by an EU programme, Bank of Valletta helps Malta SMEs innovate, and create new jobs after the COVID-19 pandemic
Keith Abela Fitzpatrick wants to renovate the way people do business in Malta. His company, Corporate Business Solutions, creates custom-made software, which helps companies better manage their finances, operations, trading, and human resource activities.
“Usually, salesmen would go and pick up an order, note it on a piece of paper, and then, repeat this tedious system,” says Fitzpatrick. “What we do is to offer instead an automated operation that allows the salesman to send the order directly to the warehouse for picking and packing, speeding up significantly the whole process and saving thousands of euros in double-handling work.”
Corporate Business Solutions is one of numerous enterprises in Malta benefitting from the European Union’s SME Initiative that was set up in 2015. Backed by the EIB Group, which is made up of the European Investment Bank and its small business specialist subsidiary the European Investment Fund , the Bank of Valletta has financed 740 small and medium-sized enterprises to realise their projects and expand beyond their local markets since.
“The financing was a catalyst for our company’s progress,” says Fitzpatrick. “More companies could benefit from such endeavours."
Creating Malta’s entrepreneurs of tomorrow
SMEs, as these small and medium-sized enterprises are known are the backbone of the European economy. They account for 99% of businesses in the European Union, employ two-thirds of the active working population (more than 90 million Europeans), and create 85% of all new jobs. They are also important drivers of growth and innovation, creating new digital technologies and products that change our lives every day. Corporate Business Solution, for example, has used its innovative software to improve the distribution of food, medicines, and public services in Malta.
But many SMEs face limited access to finance, an issue that got worse with the COVID-19 pandemic. The lack of funding makes it often impossible for business owners to grow their companies, hire new staff, invest in new technologies, or buy new premises.
“When you go to a commercial bank for a loan, you need to fill in numerous forms and put up your house as collateral,” says Fitzpatrick. “This can become especially discouraging to young entrepreneurs who need to risk it all to achieve their dreams.”
“Banks are very liquid. They do not need funding, but they do need guarantees to unlock lending, which smaller companies usually cannot afford,” says Ferran Minguella, Head of Unit in the Adriatic Sea Department at the European Investment Bank. “By transferring the risk to EU and EIB Group resources, the initiative allows SMEs to get loans from the Bank of Valletta at a reduced rate and with improved collateral requirements.”
By the end of 2023, the SME Initiative is expected to support more than 1,000 SMEs for a total loan volume of circa EUR 118m.”We believe that these added funds will give an opportunity to more businesses to recover after the COVID-19 pandemic and also to invest and grow during these challenging times,” says Alfio Lo Castro, a regional mandates manager at the European Investment Bank.
64% recognised bank loans as relevant to their enterprise
25% indicated a larger need for bank loans over the previous 6 months
15% obtained new financing from grants or subsidised bank loans over the previous 6 months
9% found access to finance the most important problem
17% recognised interest rate levels as an obstacle to getting financing
13% indicated insufficient collateral as an obstacle to obtaining financing
More jobs and innovation in Malta
The continuation of the SME Initiative offers great benefits for Malta’s businesses and people.
“The Maltese economy is based on SMEs,” says Mark Scicluna Bartoli, the executive product development - business banking at the Bank of Valletta. “With this initiative, we invest in Malta’s recovery and sustain the economy’s competitiveness in the post-COVID era.”
The SME Initiative has regional potential, too. More funding means new employment opportunities and more innovation and entrepreneurship in Malta. “Our island mentality helps us grow,” says Fitzpatrick. “We want to be leaders, make Malta the next business destination, and now with the financing, we can.”