How to prepare to use the Impulsar Portugal Line?

When a company wants to grow, new opportunities arise, but also decisions that require some preparation. It may be time to invest in equipment, strengthen the treasury, enter a new market or even acquire another company.

In any of these cases, financing can help bring plans to fruition. But before moving forward, there are some important questions: how much money do you really need? Does the company have the capacity to take on more debt? And what conditions must it meet to access financing?

The Impulsar Portugal Line is one of the solutions worth knowing. Still, before contacting a bank, it is important to understand what you want to do and if the business is prepared to take that step.

Where should you start?

The first step is to define the objective of the financing. It seems simple, but it makes a difference in choosing the most appropriate solution.

The Impulsar Portugal Line is organized into four sub-lines, aimed at different needs: Short Term, Strategic Investment, New Business and Technical Guarantees.

For example, a company that needs to strengthen its treasury has different needs than another that wants to acquire a company or invest in the start-up of a new business. Therefore, it is worth understanding which of the underlines may fit the operation before proceeding with the request.

In the case of a business acquisition, the Strategic Investment sub-line deserves particular attention, as it provides for the financing of the acquisition of shareholdings in business succession or scale-up processes. Eligibility depends, however, on the conditions applicable to the operation.

Does the company have the capacity to take on more debt?

Having a growth objective does not mean, in itself, that it is the right time to resort to financing. Before making a new commitment, it is important to look at the company’s financial situation. Turnover is a relevant indicator, but it does not tell the whole story. Results, margins, indebtedness and the ability to generate cash to meet expenses should also be included in this analysis. Imagine a company that sells more and more but has reduced margins and difficulties in receiving from customers within the expected deadlines. If you move towards an investment without valuating these issues, you may end up increasing the pressure on the treasury. The essential question is simple: after taking on the financing, will the company still be able to pay its commitments and withstand any unforeseen events?

Doing this analysis in advance helps to understand if the investment is sustainable and what risks should be considered before making a decision.

Are you going to buy a company? Start by understanding how much it is worth

The acquisition of a company can be a way to grow, enter a new market or ensure the continuity of a business. But there is one question that must be analyzed before negotiating financing: does the asking price correspond to the value of the company?

Imagine that you are valuating the purchase of a company for two million euros. Before moving forward, it is important to understand what justifies this value, what the financial situation of the business is, what growth potential it presents and what risks may affect its future performance.

A company valuation allows you to analyze these factors and obtain an educated estimate of the value of the business. It is a useful tool for both buyers and sellers, because it helps to sustain the negotiation and make more informed decisions.

In the context of an acquisition, this analysis also allows us to understand whether the investment makes sense in view of the defined objectives and the financial resources available.

It is important, however, to distinguish two issues: it is one thing to assess whether the acquisition price is adequate; another is to confirm whether the operation meets the necessary conditions to benefit from the Impulsar Portugal Line. Eligibility must always be validated with the financial institution.

How much funding will you really need?

Once you have defined the objective and valuated the investment, it is time to calculate the amount needed.

In an acquisition, for example, the price of the company may be only a part of the total value to be considered. There may be legal and financial expenses, the need to invest in the business after the purchase, or additional resources to ensure the operation of the company.

In an expansion project, it may be necessary to include equipment, facilities, hiring employees or strengthening working capital.

Doing these calculations helps to avoid two problems: asking for less financing than you really need or taking on debt that exceeds the needs of the project.

It’s also important to test different scenarios. What happens if sales take longer to grow than anticipated? What if costs increase? Is the company still able to meet payments?

These questions do not eliminate the risk, but they help to better prepare the decision.

What information should you prepare before talking to the bank?

You don’t need to have all the answers closed before the first contact. Still, the clearer the information about the project, the easier it will be to understand what the next steps are.

Start by gathering the elements that are most relevant to your case:

• Financial situation of the company: accounts, results, indebtedness and main financial commitments.
• Purpose of funding: Explain what you intend to do and how the investment contributes to the business.
• Amount required: Provide an estimate of the costs and justify the amount you want to finance.
• Financial forecasts: try to understand how the investment may affect revenue, costs, and the ability to pay.
• Information about the operation: if you want to acquire a company, gather the available data about the business, the asking price and the reasons for the acquisition.

This preparation does not replace the documentation required by the bank. The requirements may vary depending on the sub-line and the operation, so you should confirm the applicable list with the financial institution.

Before proceeding, confirm the conditions of access

The Impulsar Portugal Line has an announced global allocation of 1,500 million euros and is expected to run until December 31, 2028. However, the existence of the line does not guarantee that all companies or projects will be eligible, nor that the funding will be approved.

Before making a decision, consult the information provided by Banco Português de Fomento and confirm with the bank you intend to work with the conditions in force, the eligibility criteria, the necessary documentation and the availability of the desired stress.

This step is especially important when it comes to the acquisition of a company, since the framework depends on the purpose and specific characteristics of the operation.

Financing a project starts by knowing the business

Financing can open doors to growth, but it must be part of a well-considered decision. Understanding how much you need, assessing the company’s financial capacity, and anticipating risks are important steps before making a new commitment. When it comes to buying or selling a company, knowing its value is also essential to negotiate with information and better valuate opportunities.

Before moving forward with your next project, do you know how much your company is worth?

ValuingTools supports entrepreneurs and investors in the valuation of companies, with an independent analysis that contributes to more informed decisions.