Business Financing and Incentives: How to Choose the Right Support

Financing and incentives available to companies can accelerate investment, innovation, expansion and internationalisation projects. The challenge is not simply to find an open funding programme, but to determine whether the company, the investment and the project objectives meet the conditions required for a consistent application.

There are several ways to support business growth, including public incentive schemes, European funds, credit lines, capitalisation instruments, mutual guarantee mechanisms, tax incentives and private investment.

Each solution responds to different needs. Before looking for a funding programme, the company should understand how much it intends to invest, what the investment is for, how long the project will take and what financial capacity it has to carry it out.

What types of support are available to companies?

Financial support mechanisms do not all work in the same way. Some contribute towards specific expenses, others facilitate access to credit, while others strengthen equity through the entry of investors.

Options available to companies may include:

• public incentive schemes;
• credit lines;
• bank financing;
• mutual guarantee mechanisms;
• venture capital;
• investment funds;
• Business Angels;
• tax incentives;
• European investment support instruments.

IAPMEI provides information on incentives and financing solutions and allows companies to consult instruments designed to support their development strategies.

The choice of financing should take into account cost, term, risk, guarantee requirements, the impact on the ownership structure and the company’s future ability to generate cash.

What is Portugal 2030?

Portugal 2030 implements the Partnership Agreement between Portugal and the European Commission for the application of cohesion policy funds during the 2021–2027 period.

Portugal 2030 incentives cover different programmes, regions, objectives and beneficiary profiles. An incentive scheme may, for example, focus on competitiveness and innovation, Research and Development, climate transition or productive investment.

Relevant areas for companies include productive innovation, internationalisation, Research and Development and investment aimed at modernising productive equipment.

Companies carrying out Research and Development activities may also assess specific tax mechanisms such as SIFIDE, which allows certain R&D expenses to be considered for a Corporate Income Tax benefit.

There are also measures associated with the Just Transition Fund, aimed at territories and activities particularly affected by the transition towards a climate-neutral economy.

The existence of an open call does not automatically mean that an SME is eligible. Region, company size, economic activity, the nature of the investment and the project timetable can completely change the eligibility analysis.

What role does the Recovery and Resilience Plan play?

Portugal’s Recovery and Resilience Plan, commonly known as the PRR, is a separate instrument created to implement reforms and investments associated with economic recovery and the digital and climate transitions.

The Recuperar Portugal portal centralises official information about the programme, including its components, investments and application opportunities.

Areas covered include business capitalisation and innovation, digital transition, skills development, decarbonisation and other investments designed to strengthen economic resilience.

Portugal 2030 and the PRR should therefore not be treated as interchangeable concepts. Each instrument has its own rules, objectives, beneficiaries and timetable.

Is an incentive always a non-repayable grant?

No. The expression “non-repayable funding” is often used to describe a grant that does not need to be repaid, but the nature of the support must always be confirmed in the relevant call.

Support may take the form of a non-repayable grant, a repayable instrument, a loan, a capitalisation mechanism or a combination of different components.

There may also be solutions involving reduced interest rates, subsidised credit or public mechanisms that facilitate companies’ access to bank financing.

The nominal value of the support should therefore not be analysed in isolation. The company needs to understand the implementation conditions, the amount effectively supported and the obligations that remain its responsibility.

Which expenses may be supported?

Eligible expenses always depend on the specific call. A project may include investment in technology, software, equipment, research, specialised resources, certification, energy efficiency or productive expansion, but this does not mean that all of these expenses will be accepted under every measure.

Investment projects should be built around the real needs of the business. Artificially changing a project simply to fit an incentive scheme can compromise its financial sustainability.

It is also important to distinguish between the total investment to be made and the amount that may be supported. A call may establish a funding rate, a maximum amount per project or specific limits for certain categories of expenditure.

How can a company determine whether it is eligible?

Eligibility should be assessed before the company enters into significant commitments. Requirements may cover factors such as:

• company size;
• economic activity;
• location of the investment;
• tax and Social Security compliance;
• equity ratio;
• project start date;
• nature of the expenses;
• capacity to finance the unsupported portion of the project;
• project objectives and expected results.

Specific conditions vary from one call to another. Some measures are intended exclusively for companies, while others may also include social economy entities, central government bodies, intermunicipal communities, private social solidarity institutions or other organisations.

Depending on the purpose of the measure, there may also be instruments aimed at entrepreneurship, self-employed professionals or company creation in Portugal.

When a project is still at an early stage, the search for financing should be accompanied by proper organisation of the first months of the company’s activity, including cash flow, administrative processes and financial control.

How should an application be prepared?

An application should begin with the project, not with the form. The company needs to demonstrate why it intends to invest, what impact it expects and how it will secure the financing required to carry out the project.

1. Structure the business or investment idea

The project should have clear objectives, identified investment requirements, a realistic timetable and measurable economic impact.

2. Assess financial capacity

Even where a high funding rate is available, the company may still need to provide its own resources or obtain credit to pay expenses before receiving the support.

Before applying, the company should understand how much financing will be required and how the unsupported portion of the investment will be funded.

3. Confirm the criteria of the funding call

Sector, location, company size, expenses, dates and expected results should all be checked against the official rules.

4. Prepare financial projections

The company must demonstrate that the investment is sustainable. Revenue, cost, cash flow and results projections help assess whether the company can implement and maintain the project after the funding period.

This analysis should be integrated into a management accounting structure that allows costs, results, margins and financing requirements to be monitored before, during and after the investment is implemented.

The same projections can also be monitored through a set of relevant financial indicators, helping management assess liquidity, profitability, debt and the project’s overall impact.

5. Organise the documentation

Certificates, financial statements, quotations, licences, corporate documents and other supporting materials may be required when submitting applications.

Requesting information too late is one of the simplest causes of avoidable delays.

Where are applications for European funds submitted?

The Balcão dos Fundos is the central portal for accessing calls, submitting applications and monitoring projects associated with European funds.

The platform also centralises information relating to support measures, payments and de minimis aid.

The full call documentation should be reviewed before submission. Available funding, deadlines, support rates and selection criteria may all be decisive in determining whether the company should proceed.

When does bank financing or private capital make sense?

A public incentive is not necessarily the most appropriate solution for every project. Other alternatives may be more suitable where financing is needed quickly or where the investment does not meet the criteria of an open call.

Bank financing allows the company to preserve its ownership structure but requires repayment capacity, risk assessment and the ability to support financing costs.

Venture capital normally involves the temporary entry of an investor into the company’s share capital. IAPMEI identifies venture capital as a solution that may apply to startup, expansion, modernisation and innovation projects.

Business Angels may play a similar role at certain stages, particularly in business projects with growth potential.

The most appropriate solution depends on the business profile, the stage of the company and the expected return on the investment.

Incentives and strategy should be aligned

Financial incentives should reinforce a strategy that already makes business sense. They should not be the main reason for undertaking an investment that lacks a sound economic rationale.

A strong project should contribute to objectives such as increased productivity, economic development, innovation, entry into new markets or improved social and environmental performance.

Some instruments are specifically designed to support sustainable development, digitalisation, energy efficiency or the innovation capacity of Portuguese companies.

Other programmes may use resources from different funds, including instruments associated with the ERDF, ESF+ and other European mechanisms.

What should be assessed before proceeding?

Before submitting an application, confirm:

• whether the project is necessary even without the incentive;
• whether the company meets the eligibility criteria;
• whether it can finance the unsupported portion of the project;
• whether the project timetable is compatible with the call;
• whether the planned expenses are eligible;
• whether internal resources are available to implement and monitor the project;
• whether the expected results justify the investment.

Financial preparation is as important as the application itself. An approved incentive does not remove cash flow requirements and does not, by itself, guarantee that the investment is financially viable.

How can FHH support your company?

The assessment of incentives should begin with the business, its financing requirements and the objectives of the investment.

FHH supports companies with the financial structuring of projects, analysis of the applicable framework, preparation of financial projections and assessment of the solutions available to support growth.

Where the project involves Research and Development, it may also be relevant to assess SIFIDE and potentially eligible R&D expenses, integrating the tax benefit into the company’s wider financial strategy.

If you are preparing an investment and would like to understand which solutions may be appropriate for your project, speak with the FHH team.

Frequently asked questions

Can every company apply for incentives?

No. Each measure defines its own beneficiaries, activities, regions, eligible expenses and other criteria. The specific call must be analysed before a company or project can be considered eligible.

Does an incentive cover the entire investment?

Not always. The support rate may apply only to certain expenses, and the company may need to finance a significant part of the project through its own resources or other instruments.

Should the company look for funding first or define the project first?

The project should be defined first. The company can then assess whether there are measures compatible with its objectives, timetable and characteristics.

What is SICE?

SICE is the designation used for incentive systems associated with business competitiveness within the Portugal 2030 framework. The specific types of support, beneficiaries and rules depend on each funding call.

Is there a funding solution suitable for every company?

No. Solutions vary according to company size, activity, maturity, the purpose of the investment and financial capacity. Each case should be assessed individually.

Financing a project begins before the application

Finding an incentive is only one part of the process. The company first needs to know where it wants to go, how much it needs to invest and what return it expects to achieve.

When strategy, financial capacity and support are aligned, the available instruments can accelerate innovation, growth and business transformation projects.

For companies with Research and Development projects, see also our guide to SIFIDE: what it is, who can benefit and which expenses may be eligible.

To assess the financing and incentive options available for your project, schedule a meeting with FHH.