European Commission approves €80m scheme to support small and medium-sized enterprises

The European Commission has approved, under EU State aid rules, a €80 million Guaranteed Co-Lending Scheme for small and medium-sized enterprises in the context of the coronavirus pandemic, a statement by the Commission said.

The scheme is aimed at providing financial assistance to SMEs that are looking to invest and diversify their business following the coronavirus outbreak and its impact on the wider economy. The GCLS is a risk-sharing facility involving co-lending (i) by the Malta Development Bank (‘MDB’) for half of the total loan amount; (ii) and by other accredited commercial banks for the other half.

In addition, MDB will provide a guarantee up to a maximum of 60% of the loan amount lent by the commercial banks. Therefore, the GCLS consists of two different measures: (i) aid in the form of loans directly granted by MDB; and (ii) aid in the form of guarantees granted by MDB to the commercial banks on the part of the loan lent by them.

The Commission assessed the measure under EU State aid rules, and in particular Article 107(3)(b) TFEU, which enables the Commission to approve State aid measures implemented by Member States to remedy a serious disturbance in their economy.

The Commission found that the Maltese scheme is necessary, appropriate and proportionate to remedy a serious disturbance in the economy of a Member State, in line with Article 107(3)(b) TFEU and in particular with the State aid Temporary Framework.

In particular, (i) the measure will be in place until 30 June 2022; (ii) the overall nominal value of the guarantees will not exceed €2.3 million per beneficiary; and (iii) there will be safeguards in place to ensure that the advantages of the measure are passed on to the largest extent possible to the final beneficiaries via the financial intermediaries. On this basis, the Commission approved the measure under EU State aid rules.