Scope
Criação do Fundo de Apoio ao Financiamento à Inovação.
Goals
Set up a fund to coordinate public intervention aimed at ensuring a favourable scenario for financing strategies for creating, growing, consolidating and internationalising Portuguese companies, particularly small and medium-sized enterprises (SMEs).
The aim of the SAFPRI is to encourage the dissemination of funding instruments offering companies the best conditions, with a view to:
- Stimulating the use of venture capital in support for SMEs, favouring the initial phases of their life cycle and investment in innovative projects;
- Strengthening the mutual guarantee system and extending its intervention to companies and projects that, due to their risk or innovative nature, have more difficulty in obtaining bank funding;
- Encouraging lines of credit from the financial system in order to facilitate access to funding for SMEs;
- Fostering the use of new instruments, such as business angels, for the finance of small SME projects;
- Supporting the finance of SMEs and innovation from an integrated perspective of capital and debt components;
- Encouraging entrepreneurship and guaranteeing the capital and management capacities required in higher-risk initiatives;
Beneficiaries
- Public institutions responsible for implementing public policies aimed at companies.
Eligible Expenses
- Initial allocation by public institutions to set up the fund and for any necessary reinforcements.
- Intervention by the Innovation Finance Fund - funding for companies
Venture Capital
Venture capital is a business finance instrument especially suitable for supporting SMEs in their initial phase and highly innovative investment projects.
Based on their analysis of the business plans submitted by entrepreneurs, venture capital investors – venture capital companies, venture capital funds and business angels – assess their growth potential and the risk involved. On deciding to acquire a shareholding in a company, they share its successes and failures, while making an important contribution to defining and implementing business development policies and strategies.
The purpose of using public venture capital instruments is to share the risk with private investors in order to encourage innovative projects and put businesses on a sounder and more competitive footing.
Guarantees
The mutual guarantee system facilitates access to credit by SMEs through guarantees provided by the four mutual guarantee companies (MGCs) - Norgarante, Lisgarante, Garval and Agrogarante.
The mutual nature of the system is ensured by the prior purchase by the beneficiary SMEs of shareholdings in the MGC providing the guarantee. In other words, a significant part of the share capital of the MGCs is owned by the SMEs receiving the guarantees. After the MGC has analysed and approved the operation, the SME provides guarantees associated with bank finance in favour of credit or other types of institutions, related to their business.
The mutual guarantee system also includes the Mutual Counter-guarantee Fund (MCGF), an essential instrument in the system's financial soundness, and SPGM, which acts as a system's holding company by managing the MCGF.
Public policies are designed not only to reinforce the mutual guarantee system's capacity for intervention and extend its sphere of action, but also to encourage the use of guarantees as a finance support instrument, such as through guaranteed lines of credit from the financial system.
Guaranteeing securitisation of credits on SMEs
Bank loans are one of the main financing instruments for companies, especially SMEs.
In order to release funds for new credit operations, financial institutions issue securities collateralised by credits in their portfolios, which they place with investors in the capital market.
The credit securitisation guarantee mechanism for SMEs, in the context of the new rules governing financial institutions in determining minimum own capital (Basel II), is designed to encourage this type of operation and foster new capacities for financing this business segment.
Support for property investment vehicles
In business sectors where productive investment in property assets carries substantial weight, because of their small size and financial capacity SMEs encounter problems in obtaining finance appropriate to the characteristics of these assets.
By separating ownership from management, property investment funds ensure that the fixed property assets needed for SMEs' production projects are available, thereby reducing the financial outlay made by these companies to levels appropriate to their size and allowing them to direct their efforts and skills into managing the business.
For the implementation of spatial replanning policies or urban renewal strategies, these funds also facilitate the relocation of production units to more suitable areas structured to accommodate businesses.