Financing of small and medium-sized companies: analysis of companies from Porto District, Portugal

Abstract

ABSTRACT In this article, the purpose is to know and analyze the more used products and financing forms by small and medium companies in the district of Porto, in Portugal. The aim is also to realize the acceptability and the propensity for use of alternative forms of financing and understand what the companies’ difficulties to access credit are. The method used is quantitative and exploratory, with a survey sent to 1,600 companies in the district of Porto, about the different ways of financing used by organizations. The results indicate that bank credit is the main source of financing for small and medium companies, followed by self-financing. The financing by issuing stocks and bonds is residual. The results show three important factors when companies need to finance up: the company’s growth, the cost of borrowing and bureaucratic aspects. Despite the exploratory characteristic of this study, the three factors found are a contribution to the study on the financing of small and medium companies, deserving attention from investors, managers and equity holders.