The Malta Development Bank (MDB) has launched a scheme to provide businesses affected by Russia’s invasion of Ukraine with emergency liquidity support.
The Liquidity Support Guarantee Scheme (LSGS) consists of two measures. One is open to all undertakings affected by the crisis (LSGS-A) and the other specific to fuel and oil importers (LSGS-B).
LSGS-A is aimed at all sectors of the economy and all types of businesses irrespective of size. It will enhance access to bank financing to support undertakings whose cashflow was adversely impacted by the disruptions in supply chains and other pressures brought about by the Ukraine crisis.
LSGS-B is directed towards fuel and oil importers. The objective is that of supporting firms operating in this sector to ensure security of strategic supply in view of developments related to war in Ukraine which have had a significant impact on the energy industry.
Both measures are guaranteed by the MDB and backed by a Government guarantee covering 90 per cent of each working capital loan under LSGS-A and 80% under LSGS-B.
Facilities under both measures benefit from an interest rate subsidy of up to 2.5 percentage points on the outstanding amount of the working capital loan, subject to a minimum interest payment by the borrower of 0.1 per cent. The interest rate subsidy is applicable during the first two years of the loan starting from the date of first disbursement of the loan.
The MDB is making available a total portfolio of €100 million in working capital loans under LSGS-A and a portfolio of €50 million under LSGS-B. The maximum term of loans is up to 6 years and the maximum loan amount is determined on a case-by-case basis based on turnover, energy costs and liquidity needs. Both measures are available until the end of the year.
With the combination of the guarantee and the interest rate subsidy, these measures will be facilitating the availability, accessibility and affordability of cashflow into the real economy during such challenging times.
In order to qualify for these subsidised loans, firms are required to demonstrate in a clear manner that their cash flow has been adversely and directly affected by the aggression against Ukraine.
Businesses will be able to apply for the loans with the credit institutions that will soon be accredited by the MDB. The list of credit institutions will soon be made available on the MDB website, along with more details on both measures.
The LSGS is the second emergency liquidity support measure as part of an aid package in response to the Ukraine crisis. The first measure was in support of grain imports.
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