By the end of 2020 the number of registered businesses in Malta amounted to 130,745, up from 126,032 the previous year. Nearly 4,000 of this additional increase was due to sole owners and partnerships. Moreover, there were also an additional 717 limited liability companies compared to 2019.

Eurostat data confirms that 2020 was a very bad year for businesses in Europe. In fact, the number of bankruptcies rose by 10% in Spain in the last quarter of 2020, while the number of new business registrations was down by nearly 15% in Portugal and by 12% in Italy.

Official statistics issued for Malta contrast sharply the trend in the Continent.

Bankruptcies rose by 10% in Spain. New business registrations down by 15% in Portugal and 12% in Italy.

The table below indicates how the number of limited liability companies changed across sectors. The largest improvement occurred in professional, scientific and technical services, information and communication, construction and other services. On the other hand, the number of firms operating in the wholesale and retail trade and in the administrative and support services sectors reduced during 2020. That said, the NSO data needs to be interpreted in light of the fact that there were significant increases in the number of deregistrations in 2020 when compared to 2019 due to defunct companies being struck off the Malta Business Registry during this reporting period.

Just under a seventh of the net increase in the number of registered businesses employed more than 10 employees. Despite the pandemic, the number of firms employing between 10 and 49 persons rose by 83 or by 3.1%. This is a very impressive result given the challenging conditions businesses faced during 2020.

It is also relevant to note that while the pace of creation of new firms slowed down in 2020, it remained robust. Sectors such as manufacturing, construction, and remote gaming, have shown very little sign of slowdown during 2020. This is in line with other official data such as those on value added and employment in these sectors.

The safety net of Government assistance appears to have cushioned well many sectors, protecting the productive capacity of firms. Moreover, overall firm liquidity appears to be quite strong, with the amount of bank deposits up by 10%, or over €300 million, when compared to the situation at the start of the pandemic. By contrast in the same period after the financial crisis of 2008, firms had experienced a decline by 5%.

A European Commission survey of SME financing, reported in the 2020 Annual Report of the Central Bank of Malta, shows that 59% of domestic SMEs reported that they did not apply for bank loans, while just over half said that they did not apply for other bank related products, namely credit lines, bank overdrafts or credit cards as they had sufficient internal funds. In contrast, only around a third of EU firms fell into this category. Maltese firms also took out fewer bank loans compared to 2019 (16% dropping to 12%) while the reverse was true in the EU (15% to 18% of all firms).

Since August the amount of business loans for which a moratorium has been requested has fallen from €1,300 million to €564 million. Recourse to Government-guaranteed loans has only risen from €285 to €420 million. The bulk of finance appears therefore to be occurring through normal bank loans or internal funds.

These developments underpin the heightened sense of optimism among businesses captured in the latest business survey carried out by the European Commission.