An analysis of the SME financing schemes offered by Maltese banks and the EU

Abstract

Overview: The importance of micro, small and medium-sized enterprises (SMEs) in the last few years has been identified by local banks, the government and the European Union (EU). SMEs face various problems apart from the lack of access to finance due to their size. Local SMEs may have relied on their local bank to access finance in the past. The dissertation assesses whether SMEs are aware of the different methods available to access finance in the local market. Aim: The main aim of this dissertation was to analyse different methods available to SMEs to access finance. The dissertation analysed different methods offered by local banks and grant schemes offered by the EU. The dissertation also analysed how difficult it was for an SME to obtain funds for investment purposes. Other factors considered were the paper work and records which were to be presented periodically after funds are obtained through the EU grant schemes. Objective: Maltese SMEs were analysed through the distribution of questionnaires. Such questionnaires were distributed randomly and the sample included SMEs which have taken a loan or benefitted from a grant scheme in the last 7 years. The sample also included SMEs which have not taken a loan or benefitted from a grant scheme in the last 7 years. A series of interviews were carried out with local banks, the Malta Enterprise, the Business First and a private company that offered advisory services to SMEs. Conclusion: Local banks have started offering new financing products aimed for SMEs. The Malta Enterprise has offered various grant schemes co-financed by EU in the last 7 years. However, there was still lack of methods to access finance for SMEs. The process to apply for EU grant schemes may have been complicated for SMEs especially for the micro-sized enterprises.