Business Loans and Refinancing: What Every SME Needs to Know

June 2026

7 min. read

This is a topic we know is on the agenda for many SME managers and founders in Portugal: business financing. More specifically, how to access credit on favourable terms and when it makes sense to refinance existing debt.

The Current Landscape: A Window of Opportunity?

SMEs represent 99% of the Portuguese business fabric. They are the engine of the econom and, paradoxically, the segment that has historically faced the most obstacles in accessing financing.

But is the landscape beginning to shift?

The latest data from the Banco de Portugal points to an evolving trend in SME credit access. Throughout 2025, banks reported declining spreads on medium-risk business loans and easing access conditions for SMEs, driven by competition between institutions. The picture changed, however, at the start of 2026: the Banco de Portugal's Bank Lending Survey revealed that financial institutions tightened their SME credit criteria slightly in Q1 2026, primarily due to perceived risks associated with the general economic outlook and the prospects of specific companies and sectors. Demand for SME credit, on the other hand, continues to grow, particularly for short-term loans driven by working capital needs.

In parallel, the European Central Bank (ECB) made successive cuts to its key interest rates throughout 2024 and the first half of 2025 (six reductions in total). With effect from 11 June 2025, the deposit rate was set at 2.00% and the refinancing rate at 2.15%, levels at which they have remained since. The context then shifted abruptly.

The armed conflict in the Middle East, triggered by US and Israeli strikes on Iran on 28 February 2026, caused a global energy shock. The Strait of Hormuz, through which nearly a fifth of the world's oil and gas flows, was closed by Iran. Energy prices surged. Financial markets completely reversed their expectations: where further rate cuts had been anticipated into early March, investors began pricing in two 25bp hikes in ECB key rates before the end of 2026.

The impact on Euribor was immediate: the 12-month rate reached 2.552% on 10 March 2026, a high not seen since January 2025. The 6-month Euribor (the most widely used rate for variable-rate lending in Portugal) reached 2.312% on 16 March, while the 3-month rate stood at 2.157%. What had been a downward trajectory became a new cycle of uncertainty. Its impact on business credit warrants close attention.

What Options Does Your Business Have?

The Portuguese business credit market now offers a wider range of solutions than ever. Understanding which is best suited to your situation is half the work

Traditional Bank Credit

The most common option but not always the best used. Banks offer credit lines for working capital, investment, treasury management and expansion. The key to negotiating better terms lies in the quality of the financial information you present: up-to-date balance sheets, solid income statements, and a clean status with the Tax Authority (AT) and Social Security (SS) are essential requirements.

2026 Market Reference

Interest rate: Euribor + spread between 0.75% and 7%, depending on the company's risk profile.

Approval timeline: 2 to 8 weeks, depending on complexity and institution.

Core requirements: Regularised tax and Social Security status, updated financial documentation, no banking defaults

State-Guaranteed Lines: Banco Português de Fomento (BPF)

This is arguably the area of greatest unawareness and greatest opportunity. The BPF plays a growing role in supporting SME financing, operating through partner commercial banks. The bank covers 70% to 80% of the loan risk, which translates into more accessible conditions, lower spreads and reduced collateral requirements for your business.

Portugal 2030 and European Funds

If your business has projects in innovation, digitalisation, internationalisation or sustainability, non-reimbursable financing is available. Portugal 2030 provides support covering up to 50% of eligible expenditure, with calls programmed throughout 2026 exceeding €3.8 billion. The Linha Fomento PT2030 also allows companies to obtain a public guarantee to advance 25–40% of the approved incentive, accelerating project execution without straining cash flow.

Alternatives to Bank Credit

Access to financing no longer runs exclusively through the bank. Factoring (invoice discounting for immediate liquidity), Leasing and Renting (equipment financing without tying up capital), regulated Crowdfunding (platforms such as PPL or GoParity for projects with community or ESG components) and Fintech solutions (fully digital processes with pre-qualification) are now real alternatives for SMEs with urgent treasury needs.

In Portugal, the stock of ESG debt grew 27.9% in 2024. Companies adopting sustainable practices are accessing progressively more favourable financing conditions, a trend that shows no sign of reversing.

When to Refinance?

Many SMEs in Portugal currently carry multiple loans with different banks, at different rates, with uncoordinated repayment schedules. The result: treasury stress, difficulty planning, and financing costs above what they need to be.

Refinancing is not a sign of weakness. It is management. And in a context of interest rate normalisation, it may be the most financially intelligent decision you make this year.

One specific situation that cannot be overlooked: COVID-19 credit lines. Around 3.6% of business loans in Portugal remain tied to these emergency facilities, many in active repayment, at conditions that may no longer be the most competitive on the market.

4 Signals That It's Time to Refinance

You are paying interest at rates negotiated 3 or more years ago, without having reviewed terms since the Euribor hikes.
You have 3 or more active loans with different payment dates, making day-to-day management complex.
Your contracted spread is above the current market average for your risk profile.
You have a COVID loan maturing within the next 12–18 months.

Fixed or Variable Rate? Impact on Your Cash Flow

The context shifted significantly in recent weeks. If Euribor was holding a stable trajectory until February 2026, the Middle East conflict has reversed that trend and reintroduced uncertainty around rates. Today, the fixed vs variable decision is more critical than it has been in the last 18 months and it depends directly on your company's risk profile:

Variable Rate: Suited to businesses with a robust treasury capable of absorbing rate increases, and that believe the Middle East conflict will be resolved quickly. With Euribor between 2.312% and 2.552% (as of 16/03/2026) and markets pricing in two 25bp ECB hikes before year-end, this option carries growing risk.

Fixed Rate: Possibly the more sensible option in the current volatile environment. With geopolitical uncertainty pushing up benchmark rates, locking in the cost of capital protects the business's financial planning from external swings. Several analysts are already flagging higher repayment costs ahead for both households and businesses.

Run a sensitivity analysis that includes, as a mandatory scenario, two 25bp ECB hikes in 2026, something markets are already pricing in. With Euribor resuming an upward path, ignoring this risk in a business credit contract is a strategic error. If your bank has not yet revised its proposals in light of this new context, now is the time to ask for a reassessment.

The quality of your credit application is decisive, not just for getting approval, but for negotiating terms.

The conflict in the Middle East has reintroduced significant volatility into financial markets and, realistically, if you are currently negotiating credit, or have loans to renew in the next 3 to 6 months, there are three concrete impacts you cannot afford to ignore:

Euribor is rising and current levels represent a meaningful increase compared to February averages.
The ECB may raise rates. Markets are pricing in two 25bp hikes before end-2026. Variable-rate contracts signed today may end up more expensive than initially projected.
The window to fix rates still exists. While fixed rates have not yet fully absorbed the expected hikes, there may still be an opportunity to negotiate conditions that protect your cash flow.

Good Practices

Finally, we conclude with 3 suggestions for best practices that will certainly bring benefits to your business:

Audit your current debt. List all active loans with their respective rates, spreads, maturities and monthly costs. This is the starting point for any decision.
Check your eligibility for BPF lines. Most SMEs with a regularised status and at least 2–3 years of trading may qualify. Access is through commercial banks, but it is worth informing yourself beforehand.
Consult a specialist before negotiating. The cost of an upfront analysis is always lower than the cost of a poorly structured contract.

Organized and up-to-date financial data is the main differentiating factor in spread negotiation. Rigorous accounting is not only a legal obligation but also a strategic asset when dealing with a bank.