SME Enhance vs Digitalise your SME: choosing the right EU funding in Malta

At a glance: how the two schemes compare

SME Enhance and Digitalise your SME are both non-repayable EU grants administered by the Measures and Support Division (MSD) in Malta under the EU 2021 to 2027 funding programme. Applications go through the same portal at sfd.gov.mt, the same biweekly cut-off schedule applies, and both share a final programme deadline of 30 June 2029. The grant ceiling, financial standing requirements, procurement rules, and advance payment arrangements are identical across the two schemes. The aid intensity structure overlaps but is not identical: both share the De Minimis and Start-up tracks, while SME Enhance adds a regional Investment Aid track and Digitalise your SME adds two digital top-ups. What differs is scope: SME Enhance is broader, Digitalise is narrower but more specific about digital investment.

The overview above is a starting point. Before structuring a project budget, download the current Practical Guidelines for each scheme from fondi.eu to confirm the rules in force for the relevant call period.

What SME Enhance covers

SME Enhance funds investment in tangible and intangible assets across four eligible categories:

• Expansion: investment that increases productive capacity, opens a new market segment, or scales existing operations
• Diversification: investment that moves the business into new products, services, or business lines not previously produced
• Innovation of operations: investment in processes, technologies, or methods that materially change how the business operates
• Initial investment: start-up or early-stage capital for a new productive activity

Eligible cost categories under SME Enhance are structured as follows. The main component is Equipment and Machinery, which includes furniture, fixtures and fittings (with exclusions), production equipment, IT hardware, intangible assets such as software licences and IP, and vehicles where directly related to the economic activity and where primary use is not general transport. Two-year software subscriptions count as eligible. Ancillary items are eligible up to 10% of the Equipment and Machinery eligible cost, capped at a €10,000 grant contribution. Private operational premises lease costs are eligible for up to two years, capped at 10% of the Equipment and Machinery eligible cost (20% for start-ups). A 7% indirect cost flat rate applies on all three direct cost components combined.

Items excluded from SME Enhance include repair and maintenance, VAT and duties, insurance, used or refurbished equipment, land, buildings and construction works, fees for design or general consultancy (except through the 7% flat rate mechanism), mobile phones, M&E works such as plumbing, electrical and air conditioning unless specialised for the economic activity, and solar panels. The full exclusion list is in the scheme's Practical Guidelines on fondi.eu.

One formal rule worth noting: projects focused primarily on digitalisation should be submitted under Digitalise your SME rather than SME Enhance. This is not a matter of preference. It is built into the GBER framework governing the scheme. If the core investment is digital in nature, assess Digitalise your SME first.

For a full guide to SME Enhance, including the financial standing tests, aid intensity breakdown, and step-by-step application process, see the SME Enhance Malta guide.

What Digitalise your SME covers

Digitalise your SME funds investment specifically in digital technologies and related processes. The scheme is designed to improve efficiency, productivity, and customer experience through digital transformation. The eligible cost list is explicit and digitally focused:

• Commercial off-the-shelf (COTS) software and custom-developed software
• Hardware: laptops, docking stations, monitors, and tablets
• Analytical tools, combining hardware and software components
• Cybersecurity systems
• Cloud computing solutions
• Internet of Things (IoT), artificial intelligence (AI), Big Data, and Quantum Technology
• Routers, switches, and WiFi equipment
• Other hardware, software, or digital solutions approved under the scheme
• Installation and training on specific acquired items, provided these are included in the purchase price and delivered by the same supplier
• Two-year software subscriptions
• 7% indirect cost flat rate on eligible direct costs

The scheme does not cover non-digital physical assets such as production machinery, vehicles, or general fit-out. If the investment includes these alongside digital items, SME Enhance is likely the more appropriate route.

The ancillary items cap, premises lease provisions, and 7% indirect cost flat rate work on the same basis as SME Enhance. The financial standing requirements, procurement routes, advance payment structure, and reimbursement claim rules are identical. For the full Digitalise your SME scheme guide, including eligible costs in detail and the application process, see the Digitalise your SME Malta guide.

Eligible costs: what each scheme funds

The table below maps specific cost types against both schemes. Items labelled "Conditional" require verification against the current Practical Guidelines on fondi.eu before inclusion in a project budget.

Aid intensity and grant amounts

Both schemes share the same grant ceiling and the same minimum. The maximum grant under either scheme is €128,400, which includes the 7% indirect cost flat rate applied to eligible direct costs. The minimum grant is €10,000. The aid intensity rates overlap on the De Minimis and Start-up tracks, but the two schemes diverge above that: SME Enhance offers a regional Investment Aid track, while Digitalise your SME instead offers two top-ups specific to digital investment.

Both schemes share the De Minimis track (50% Malta, 60% Gozo) and the Start-up track (60% Malta, 70% Gozo). SME Enhance adds a regional Investment Aid track under the GBER framework:

Under the De Minimis track, the rate is 50% for businesses in Malta and 60% for businesses in Gozo, subject to the cumulative De Minimis ceiling of €300,000 over any rolling three-year period. The choice of track affects your eligibility based on sector and State Aid history. Confirm which track applies to your business before building a grant budget.

Digitalise your SME does not use the regional Investment Aid table above. Instead, it adds two digital top-ups: a +10% top-up on items covering Cyber Security, IoT, AI, Big Data, Cloud Computing, or Quantum Technology (funded by the Malta Digital Innovation Authority, subject to budget availability), and a +5% top-up where a project moves from no more than 6 to at least 7 of the 12 digital intensity technologies. For an investment built around these technologies, this can make Digitalise your SME the more generous route despite the absence of the regional track.

Advance payments are available under both schemes: up to 40% of the approved eligible grant in total, paid in two stages: a first advance on signing the Grant Agreement and a second advance during the implementation period. The reimbursement model applies to both: you fund the investment, and the grant reimburses the approved portion after expenditure verification.

Grant rates can be confirmed in the current Practical Guidelines on fondi.eu.

Financial standing requirements

Both schemes apply the same financial standing tests. These are assessed at the application stage using your most recent set of accounts.

The primary test: the ratio of total eligible cost to net assets must be at least 2%. A project costing €100,000 in eligible costs requires net assets of at least €2,000. This is a low threshold designed to screen out businesses with no asset base at all.

The secondary test applies to businesses that are not start-ups: net assets must represent at least 40% of the total eligible cost. If they do not, MSD does not reject the application outright. Instead, the total eligible cost is capped downward to the level that brings it into compliance. This can materially reduce the grant amount.

Negative net assets are not acceptable, with one exception: start-up enterprises under three years old can have negative net assets provided the deficit does not exceed €120,000.

These tests apply equally under SME Enhance and Digitalise your SME. If your business is close to the 40% threshold, model the impact before submitting. A capped eligible cost can change the grant calculation significantly.

Which scheme fits your project

Three questions help narrow the choice.

Is the investment purely digital?

If the project consists entirely of hardware, software, cloud infrastructure, cybersecurity, or other technologies from the Digitalise your SME eligible cost list, that scheme is the appropriate route. The scheme is specifically designed for this type of investment, and its Practical Guidelines address digital cost categories with more granularity than SME Enhance does.

Does the project include non-digital assets?

Production machinery, specialised equipment, vehicles, manufacturing fit-out, and non-digital operational assets do not fall within Digitalise your SME. If these form part of the project, SME Enhance is the correct scheme. Where a project combines digital and non-digital elements, SME Enhance covers the full scope, provided the investment rationale links clearly to one of the four eligible investment categories.

Is the project borderline?

Some investments sit at the edge: an IT-heavy operational overhaul that also includes physical infrastructure, for instance. In these cases, the deciding factor is whether the core investment activity maps more naturally to Digitalise your SME's explicit eligible cost list or to SME Enhance's broader investment categories. SME Enhance's formal exclusion of "projects focused on digitalisation" means that a predominantly digital project should not be submitted there; Digitalise your SME's scope does not extend to non-digital physical assets. If neither scheme clearly fits the full project, the investment can be structured as two separate projects, one application under each scheme, provided the same cost item is not claimed under both.

Both schemes are open for applications now. Budget availability is finite under each, and the schemes close when their respective budget envelopes are exhausted. The EU funding eligibility checker shows which schemes your business is likely to qualify for. For a full overview of all six EU schemes available in Malta or to discuss which applies to your specific project, see our EU Funding Advisory service or get in touch directly.

Frequently asked questions