Financing is essential for small businesses, providing access to capital for growth and innovation. In Portugal, there are various options, such as credit lines and state support, which help SMEs overcome financial difficulties. Find out about the main credit lines and incentives available.
Small and Medium-sized Enterprises (SMEs) are fundamental to economic growth and, above all, to social cohesion, as they represent 99.9% of the Portuguese business fabric.
Despite their importance, this type of company faces a series of economic difficulties on a daily basis that jeopardise their viability.
This is where funding comes in, which in Portugal takes the form of credit lines, state support and incentives or non-repayable loans offered by European mechanisms.
Why do small businesses need funding?
Of the 1.45 million SMEs in Portugal, around 1.3 million are micro-enterprises (Pordata data), i.e. family businesses with small turnover.
Even so, these entrepreneurs still have to pay for electricity, water, gas, telecoms, salaries, taxes and suppliers at the end of the month. They should also consider investing, for example, in new equipment.
You've done the maths, these companies work with very small profit margins that often prevent them from investing and even meeting their obligations on time.
The capitalisation of the company thus appears to be the main reason why the financing of small companies plays such a crucial role.
As we've mentioned, whether it's to invest in new technologies that will help your business grow, or so that your operation can overcome a time when orders are scarce, support for companies in Portugal can be obtained in multiple ways, one of which is through credit lines.
Credit lines available for SMEs in Portugal
Among the lines of financing for SMEs in Portugal, the main ones are:
- The Capitalise More Line, from the Agency for Competitiveness and Innovation (IAPMEI): this is a credit line with a mutual guarantee, with a maximum amount of 4 million euros and a maximum term of 12 years, which aims to strengthen the economic capacity of SMEs (working capital, innovation projects, valorisation of fixed assets, etc;)
- The IA Line: credit line included in the famous Recovery and Resilience Plan (PRR) that helps SMEs invest in integrating artificial intelligence into their operations;
- The Treasury Support Line (IAPMEI): line of support for the capitalisation of micro and small companies with an interest grace period of 12 months and a maximum repayment period of 4 years;
- The Lines of Caixa Geral de Depósitos (CGD): As a state-owned bank, CGD offers SMEs multiple credit lines guaranteed by the European Investment Fund (EIF), such as Caixa InvestEU, the Caixa ESG Line and the Caixa BPF InvestEU Sustainable Investment Line;
- The Capitalise Mid Caps Line: long-term credit line with the support of the European Investment Bank and the Portuguese Development Bank.
State support and incentives for small businesses
In addition to IAPMEI's SME 2025 Fund, which in practice aims to help SMEs protect their industrial property rights (patents, designs, etc.), support for companies in Portugal includes:
- Portugal 2030 Incentive Systems: a programme that gives access to non-repayable grants or co-financing for qualification, investment, internationalisation and entrepreneurship projects;
- SIFIDE and RFAI: tax incentives that offer, respectively, a corporate income tax deduction on investment in research and development (R&D) and deductions from taxable income on investments in fixed assets;
- Non-refundable vouchers for start-ups: Start-ups wishing to invest in projects linked to the green and digital economy can take advantage of non-refundable vouchers worth up to 30,000 euros;
- National Production Support Programme: up to 60% in non-repayable grants for investment in Industry and Tourism;
- National Microcredit Programme, by the António Sérgio Cooperative for the Social Economy (CASES): programme for access to small loans (up to 20,000 euros) to support the creation and expansion of projects.
Advantages and disadvantages of bank financing
O credit for SMEs is an essential tool for these companies, which make up the bulk of Portugal's economic fabric, to be able to innovate and grow.
However, as with any bank loan, this ends up bringing not only advantages, but also some disadvantages.
Let's start with the advantages:
Advantages
- Access to capital to manage and expand the business or invest in innovation;
- The SME still retains total control over its business, as it does not require shareholder participation;
- Business loan interest can be deducted from the company's gross profit;
- Flexibility in the use of funds.
Disadvantages
- Debt and interest payments, which in turn are stipulated on the basis of a risk assessment;
- Greater pressure on cash flow;
- Failure to pay instalments can result in penalties and affect your credit history;
- Limitation of management autonomy due to restrictions and contractual clauses;
- Risk of seizure of assets in the event of non-compliance with the credit agreement.
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