SME Chamber


 GRTU's Director General Vincent Farrugia opened the conference which was held in the afternoon at the Corinthia Palace Hotel. The conference was organised by the GRTU and BOV. The DG presented the results of a GRTU survey held in March to analyse how much information do our SMEs really have and how easily accessible do we find them. GRTU also sought to analyse their suitability and efficiency to the needs of SMEs.

This is in line with GRTU's renewed efforts this year to expose SMEs to what is available, discover any short-comings in the way schemes are being administered and propose changes with the aim of improving the situation. The full results are available on the GRTU website:

The survey found that 32% of respondents benefitted from a type of fund, grant, scheme, tax credit, etc… with the majority saying they received between €5,000 and €250,000.

69% of those that did not benefit said that it is because they never tried, 18% said they had not felt the need until now and 13% said they attempted but had their application refused. The refusal was because they either did not match the criteria themselves or of the scheme and a small group said they were refused for no apparent reason or because the project was not deemed to be innovative enough. The largest chunk, 33%, made the first steps but got discouraged on the way due to bureaucracy.

When we asked them what schemes had they heard about, aimed at helping SMEs access funds, the most popular was the JEREMIE initiative being administered by BOV, however still 39% said they never heard of any 53% however chose to say that they know of the existence of schemes that can help them access loans at lower collateral and guarantees, with only 10% of these saying they actually tried to make use of them with half of these being successful.

We asked respondents to tell us form where do they most frequently learn of schemes and how would they like to receive the information. Highest ranking were Government in general through advertising and promotions and the GRTU, followed by the initiatives and information provided more directly by the Government authorities. Their preference is to learn by email and through information sessions and direct one to one meetings.

59% said they were not completely satisfied with the schemes currently offered by Government authorities. They said improvements were needed in the amount of bureaucracy and paperwork applying entailed. They also complained that the payments took too long and that the schemes did not match their real needs. Most also complained that if they found a scheme they were interested in they would probably find that there is something in the criteria that made them ineligible to apply or else if there is a scheme which they can apply for they would have no real interest in it.

Throughout the survey it was evident that there is lack of information and enterprises themselves stated that they need more guidance and information that is accessible. The enterprises answering the questionnaire went on to suggest what they think would constitute good ideas for funding.

The Director General stated that the absolute majority of EU funds were generally reserved for big industrial enterprises or for agriculture. It is a relatively recent development that funds ar being offered to the majority of enterprises not the minority. SMEs are worth investing in. SMEs were responsible for 80% of the new jobs that have been created. Mr Farrugia said that many businessmen want money on the table, but that's not how the EU system works. It has become difficult for businesses to get money or loans especially when the businesses are small or at start-up phase. On GRTU pressure, the Government has come up with the Micro-Credit scheme which has now been extended to the Micro-Invest scheme which applies also to very small SMEs and even the self-employed. GRTU has pushed for schemes not to apply for manufacturers only but is still working to open most schemes also to retail and also to push retailers to develop further to be in a position to acquire more benefits.

Hon Tonio Fenech Minister for Finance, the Economy and Investment, stated that over the past four years it has spent €90 million to help businesses. Government has recently extended most of the schemes directed to SMEs. 570 businesses benefited from this support and the ERDF funds on offer have grown from €20 million to €42 million and the latest call closes on 3 April. 230 jobs have been created by this help. The JEREMIE scheme administered by BOV matches €10 million from EU funding with €52 million that are guaranteed by the scheme.

Hon Fenech said that Government has to strive to see SMEs are equipped with the required tools. Our job is also to improve the financial environment for business to be able to flourish. He also stated that an EU wide effort is needed. We must ensure they have enough liquidity to be able to benefit from EU funds.

The Government has recently come up with its Business First scheme through which 50 Government services are now offered under one roof at Malta Enterprise (in its new location inside the old St Luke's hospital grounds). 2500 businessmen contacted Business First in its first two months of existence. The government is also investing €16.7 million to improve the infrastructure in the industrial zones.

Also speaking at the event, Joanna Drake from the Commission's Enterprise DG said she is honoured to be able to serve SMEs from the work she does at EU level. She stated that be it from big Germany or small Malta, SMEs face basically the same problems and challenges. A very interesting statistic is that SMEs employ 80% of total employment but during the period of recession SMEs created 85% of jobs. More women entrepreneurs than 34% are needed and she also stated that Think Small First is currently the most important tool. Another interesting statistic is that one of three SMEs who applied for a bank loan did not get it. She mentioned the new mechanisms targeted at access to finance- COSME and Horizon 2020. Dr Drake also emphasised on the importance of opening up the definition of innovation that suits SMEs. She warned that Malta was missing out on the EU's considerable funds for the setting up of venture capital funds.

She concluded by saying this conference is a good effort and much more is needed to reach out to SMEs.

Mark Scicluna Bartolo from the BOV SME unit explained, the JEREMIE fund was launched last April with a budget of €25 million in the first year. 198 enterprises were helped and the total allocated amounted to €19.3 million, a take-up ratio of 78%. The €19.3 million represent investment amounting to €30 million. 80% of the enterprises helped are SMEs with less than 10 employees. The maximum loan is of €510,000, payment over 10 years. The direct benefits are reduced collateral obligations and advantageous interest rates.

Total amount of funds available: €50 million. Ten months down, 26 months are left for this scheme. A number of applications have already been submitted and they are treated on a first come, first served basis.

Mr Scicluna Bartolo and Karl Herrera from ME explained how a successful application for EU funds is to be drawn up and warned of the pitfalls that are to be avoided. Emphasis was made on being realistic with the targets as they will haunt the business when it comes to get its funds back. Giving the necessary time to filling in the application and ensuring it really reflects the idea is very important. The 20 million for industry grants were also explained.

But the best example of how EU funds can be obtained was the success story reported by Remco Slik, a Dutchman who moved to Malta 10 years ago and who has now, with EU funds, restored an old palazzo in Vittoriosa and will be shortly opening it as a boutique hotel – Palazzo Vittoriosa. In 2008, he purchased an old and neglected palazzo in the core of Vittoriosa, formerly part of an auberge, at that time full of rubbish, but nonetheless a neglected gem. He applied for EU ERDF funding to restore it and open a boutique hotel, basing themselves on the huge attraction of the building and its ambiance. They applied through the Tourism and Sustainable Development Unit who were of real help. Mr Slik stated there is a lot of paperwork and he would suggest having the help of a professional advisor.

Stellina Galea, accountant by profession, explained in accountancy terms what the JEREMIE offer can mean in saved interest payments and the like. It can in fact be very advantageous is worked correctly.

Hon Minister Jason Azzopardi, Minister for fair competition, small businesses and consumers, was replaced by Permanent Secretary Paul Zahra and explained the many positive initiatives Government has already in place and in the pipeline for SMEs. He explained how government has cut down on the time businessmen used to spend to get government permits with the new initiative, currently under consultation, to simplify trade licencing.

 Hon Minister Jason Azzopardi, Minister for fair competition, small businesses and consumers, was replaced by Permanent Secretary Paul Zahra and explained the many positive initiatives Government has already in place and in the pipeline for SMEs. He explained how government has cut down on the time businessmen used to spend to get government permits with the new initiative, currently under consultation, to simplify trade licencing.

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