As outlined by the Times of Malta as well by DBRS in a recent report they published about the Maltese economy, access to funding remains one of the most pressing issues faced by Maltese SMEs. The percentage of companies that pointed towards access to funding as one of their main obstacles rose to 11.5% in 2013 from 4.7 in 2011.
The Central Bank of Malta in collaboration with the European Commission carried out a survey that looks into funding trends and facts locally compared to European counterparts. It was found that Maltese SMEs are more dependent on bank overdrafts and other sources of funding such as credit lines or credit card facilities than other European companies in general. In fact, in 2014, more than 70% of local SMEs resorted to funding compared to 37% across the rest of the EU.
Maltese SMEs resulted to be the most dependent on internal sources of funding such as retained earnings and funds acquired from selling assets. Internal funding is seen to increase steadily as firms increase in their size. This type of funding is also the most advocated by those companies whose concept is more innovative and unprecedented. Because they are deemed to be at higher risk of failure due to this, it becomes more difficult for such companies to be granted funding.
External financing is more resorted to when it comes to inventory, working capital, new project development, paying of debt and recruitment and training, compared to the rest of the EU. On the other hand, Maltese SMEs are noticeably less dependent than the EU average on leasing.
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