Malta: How to finance the cost of a business plan

This article was published on 28 June 2020 in Corriere di Malta newspaper

How to finance the cost of a business plan

In one of the previous articles we have analysed how important it is to implement a business plan that, on the one hand, can be a useful tool for entrepreneurs and managers who want to develop a project or start a start-up and, on the other hand, can also constitute a credible document to convince investors, banks and public authorities.

It is normal for companies to seek the assistance of a professional, experienced in the drafting of business plans. The Government of Malta provides for the possibility of recovering part of the professional’s cost through a reimbursement procedure up to 80% of the cost, equal to the amount of EUR 4,000 out of a maximum expenditure of EUR 5,000.

However, when filling out the application, be careful to follow the rules defined by the Government’s guidelines. For example, there are some aspects of importance we would like to highlight for you to avoid making mistakes.

First, it is necessary to check deadlines: applications are to be submitted, through an online platform, by certain dates (open calls), the next one is 17 July 2020. But don’t panic, there are also other further deadlines and the last one is scheduled for 30 November 2020.

In addition, it should be verified that your business can actually be defined as micro, small or medium-sized enterprise and that it is included in the list of eligible sectors. For example, steel processing companies, transport companies or those that provide insurance financial services, or which produce advertising material, are excluded.

Besides, it is not possible to include among the costs those relating to ongoing services such as tax advice services provided routinely, or legal or advertising advice services that are provided regularly.

Another very important aspect relates to the professional advising on the drafting of the business plan. The professional consultant or consultancy company must external and anyhow independent from the company who intends to apply for the grant, in the sense that there must be no business relationship between the two. In addition, the professional providing you with his/her consultancy should be listed in a special registry before the Ministry which manages these funds. So do check on your consultant to verify he/she is duly registered.

Among the various declarations and certificates to be attached to the application, there is a very important statement relating to so-called “de minimis aid”, which is now well known by companies that are used to submit applications for grants.

The so called “de minimis aid” is a measure that has all the characteristics of a State Aid, but does not distort competition nor has an impact on trade since such aid does not exceed a preset amount and it is granted to a company in a given period of time. Therefore, such aid is not considered as State Aid in strict sense and does not follow the notification procedure which otherwise would involve complications and long times.

The rule is that a company can receive “de minimis” subsidies from a Member State within three years, within the maximum of EUR 200,000.

Moreover, if various companies, formally separated, act on the market as a single entity, by virtue of the links between them, through forms of control or connection with the company applying for the grant, in this case it is necessary to consider them all as a single company and must declare those positions in the application, also including the relevant balance sheets.

The approval procedure is not normally very long and in the event that the Evaluation Committee does not approve the application, it sends a letter describing the reasons why the application was not approved with the possibility of appeal within 10 days from the notification date and in this case a board will re-evaluate the application on the basis of the reasons given in the appeal procedure.

Following the approval of the application, an agreement is reached between the public authority that manages the funds and the contact person identified by the company that applied for the contribution.

At this point the consultancy service covered by the application, in this case the business plan, can be developed and once finished, transmitted in the final version along with the request for reimbursement.

As this measure is co-financed by the European Union, the beneficiary has an obligation to give visibility to the intervention following the guidelines rules.

If you are about to start a new business or develop a new project, you will surely need a good business plan. Please consider seeking our assistance for developing such a business plan as we can provide you with any information and support you need to identify the scheme that best suits your specific project and submit its application.

You can easily contact us by sending an email at the address below.

Stefano De Stalis
European Affairs and State Aid Manager
Sheltons Malta