Malta and the European Union are keen to attract and promote investment in the region and offer a range of programs through which business investment may be funded. We guide our clients through the process of identifying the most suited program/s and the application for funding.
Accessibility – Project Funding in Malta and in the EU
We find that several entrepreneurs and executives assume that you need to have a remarkable new project to qualify for funding. The reality is that funding may be available even for more common initiatives such as a business plan, acquisition of new plant/machinery or expanding to larger commercial premises.
There are various funding programs, and they each have their specific:
- Areas funded
- Maximum funding (cap of aid)
- Intensity of Aid (proportion of costs that the scheme will cover)
- Program duration
- Project timelines and deadlines
- Type of aid (for example advance or reimbursable cash grant, tax credit, soft loan)
- Eligible costs (the specific expenses within scope of the program)
- Eligibility criteria and conditions
- Type of state aid
Eligibility for Project Funding
We start by comparing your project against the factors above. Some programs tend to be instantly more compatible, such as when the project total value is similar to the scheme maximum funding cap, or if your project fits within one of the industries specifically promoted by the program. All the programs have their own particular pros and cons, for instance one program may offer a lower total funding amount but would fund a higher proportion of the expenses; one may offer a cash grant in advance rather than reimburse investment after the costs have been incurred. A number of programs also require the applicant to have a minimum period of establishment, such as the company being incorporated for more than two years.
It may also be possible to apply for more than one scheme for the same business project, although
you would not receive funding for the same investment expense more than once. We encourage our clients to apply for more than one program, if these complement one other and have in scope diverse expenses or investments.
State Aid in Business Funding
In general, the EU prohibits governments form offering aid to companies in order to ensure a level playing field among competitors. Therefore the state aid route selected is a very important consideration.
Long standing de minimis state aid rules allow funding to an upper limit of € 200,000 within any 3-year period. More recently, the General Block Exemption Regulation (GBER) mechanism was introduced primarily to support innovative, environmentally sustainable and small-to-medium-sized businesses. The GBER has no defined maximum funding, but typically finances a lower ratio of the overall project cost. The funding value or proportion also depends on the size of the business where smaller companies tend to enjoy a larger fund provision.
Timing of Funding Programs
We cannot stress enough the importance of the timing in an application for funding. A number of funding programs work as open rolling calls – this means that you may submit your application at any time during the duration of the program.
Other financing schemes issue periodic calls, typically annually or bi-annually. Such schemes have a deadline by which all applications must be received, after which the call is closed. As a result, you can only apply for such funding during an open call and you have to plan in advance to be sure that your application is completed and ready to submit within the time window.
Bear in mind that certain programs need to be applied for before expenses are made or a prototype is developed, so it is always best to discuss funding opportunities with us as early as possible rather than risk missing out on funding.