A seed investment scheme was launched today, offering investors a maximum tax credit of €250,000 per year when investing in start-ups.

Speaking at the launch of the scheme, Prime Minister Joseph Muscat said the scheme will help address the problem of access to finance faced by start-ups.

He criticised local banks for failing to provide financing to small companies. The banks, he said, should not be “glorified safety deposit boxes”, and it was crucial that they engaged in the economic wellbeing and development of the country.

Dr Muscat said the new scheme is meant to compliment bank lending, not act as a substitute to it.

He cautioned that it would not provide for risk-free investment, yet it would allow investors to be part of the future.

Economy minister Chris Cardona said the economy was dependent on access to finance, and the government was trying to address these shortcomings by making start-ups more appealing to investors.

The scheme opens on August 1 and will remain active until December 31, 2018 or until €5 million worth of applications are received.

Companies wishing to obtain financing must submit an application for determination of eligibility with MIMCOL.