The Malta Business Bureau and Bank of Valletta have joined forces to conduct an extensive study into whether local businesses are being provided with the right access to finance that will enable them to operate effectively in the EU single market.
The presence of SMEs is critical for the European economy, but it is widely acknowledged that more needs to be done for them to reach their full potential. This can only be achieved with the right access to finance.
A study commissioned by the MBB, in collaboration with BoV, will shed light on Malta’s current access to finance that is being provided by credit institutions to local businesses.
MBB president George Vella says the study will also include concrete recommendations to the government and credit institutions on the financial products and access that local SMEs require to reap the full benefit of their potential and contribute further towards economic growth and the creation of new jobs. In Europe, more than 21 million SMEs operate within the single market, and together are responsible for most of the sustainable economic growth and job creation on the continent.
The economic crisis has restricted SMEs from gaining access to finance, which is often considered the lifeline for start-ups, enterprise sustainability and business expansion. One of the key actions in the 12 levers recommended by the European Commission last year – aimed to boost economic growth and strengthen confidence in the single market – was specifically “access to finance”.
Having a strong and successful presence of SMEs, the Maltese private sector is increasingly contributing towards economic growth and employment generation. The local economic scenario complements the general trends displayed across the EU, in which SMEs are the prime vehicles through which value added is produced, particularly in the non-financial business economy, while serving to generate jobs outside the public sector.
Local business patterns differ from the mainstream European model, particularly due to the size of local enterprises, even though the vast majority of Malta-based businesses pertain to the lower-end categories of the EU SME definition. Most local SMEs lie within the micro-enterprises category.
Like their continental counterparts, Maltese businesses face significant difficulties in obtaining the financing they require to grow and be more innovative. Access to finance to help support the steady expansion of business operations is a real challenge for all businesses, with the assumption being that the smaller and “younger” the business is within its lifecycle, the more problematic it is to obtain credit lines.
Following the successful completion of an impact assessment on the European Commission proposals for a Common Consolidated Corporate Tax Base earlier this year, MBB and BoV will collaborate on another critical study, which will focus its efforts specifically on businesses and their access to finance.
Mr Vella highlights how in recent years the bureau has been very active in issues related to the European Single Market and how legislations may impact Maltese business.
“While in our first study our intention was to quantify the impact of the proposed CCCTB Directive on Malta should it be adopted at EU level, this time it is our intention to draw up a report with recommendations on financial products that our SMEs and micro-enterprises are likely to require at various stages of their business development and business cycles,” he said.
“This assessment will strengthen and consolidate the MBB’s work related to the European Single Market, by presenting solid recommendations to the government and local credit institutions on the real financial requirements of our businesses for them to continue to contribute towards growth and employment in the Maltese economy.”
The assessment study is formally entitled ‘Market gaps in access to finance and the feasibility of new financing instruments in the EU, addressing the credit needs of Maltese business.’
Consultants may view the terms of reference on the MBB website www.mbb.org.mt and submit their application to the chief executive officer at ceo@mbb.org.mt by September 28.