Portuguese SMEs have greater difficulty in obtaining financing

A study conducted at the University of Aveiro by Daniela Fonseca Pinheiro shows that the credit granted to SMEs increases according to their size, liquidity, and assets that can be given as collateral. Collateral also becomes more relevant in a period marked by an economic crisis.

The difficulties felt regarding access to financing affect the financial sustainability of SMEs, especially those that do not have access to other financing alternatives and are thus prevented from growing, innovating, and increasing competitiveness.

This is the conclusion of Daniela Fonseca Pinheiro, in a study carried out within the scope of the Master's in Economics at the University of Aveiro.

Daniela Pinheiro analyzed the behavior of 3190 Portuguese small and medium-sized enterprises between 2011 and 2016, with the aim of evaluating how the crisis affected the performance and access to financing of these SMEs.

The academic work reveals that “for banks, SMEs face greater risks (business failures, bankruptcy, low capitalization level), which often makes financing unattractive for financial institutions.”. The results also suggest that “smaller companies are the most affected in accessing financing, as they have a lower probability of survival, which increases the risk of default compared to large companies.”.

The difficulty in accessing financing has been felt by SMEs, but it has also been recognized “which is why support for SMEs has been one of the European Commission's priorities for economic growth, job creation, and economic and social cohesion.”.

The economist also concludes that “studying the advantages of access to bank financing compared to other credits for SMEs can also provide important conclusions about the best capital structure alternatives for SMEs.”.

In summary, it is understood through the study that SMEs should adjust and reposition themselves during periods of crisis. However, the work and attention given by the competent entities should be carried out in a more relevant way, both in times of recession and economic progression, as they play an important role in the Portuguese economy, forming the majority of the Portuguese business fabric and contributing substantially to the gross domestic product. With this, it is fundamental to guarantee the financing of SMEs, in order to preserve their necessary financial vigor, allowing continuous investment and greater value generation.

Dissertation published in 2018, authored by Daniela Fonseca Pinheiro, within the scope of the Master's in Economics, at the University of Aveiro: https://ria.ua.pt/handle/10773/22863

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