Banco de Fomento to Launch €2.5 Billion Housing Credit Lines and New PT2030 Financial Instruments
Portugal's national promotional bank, Banco de Fomento (BPF), has announced it will launch four new financing lines under the Portugal 2030 program next week, including a landmark €2.5 billion allocation to support public and private controlled-cost housing projects. The announcement was made by CEO Gonçalo Regalado, who provided an update on the bank's recent activities, revealing that pre-approved guarantee lines have already resulted in 24,600 applications seeking a total of €7.52 billion in financing. To date, €2.85 billion in operations have been formally contracted.
The new housing credit lines are part of a broader government strategy to address housing affordability and increase supply. These funds will be accessible to both public and private developers undertaking projects with controlled costs, aiming to expand the availability of affordable homes in a market under pressure. This initiative is complemented by a separate €322 million line, backed by the Recovery and Resilience Plan (PRR), also scheduled for launch in the third quarter to finance PRR-supported projects. The policy objective is to leverage public funds to stimulate private sector construction and deliver a substantial number of new residential units.
Mr. Regalado detailed the bank's strategy, which involves creating three distinct financial instruments to accelerate the absorption of European funds and support corporate investment. The first, named 'Fomento 2030', is a guarantee line enabling companies to receive a 40% advance payment on approved incentives, a facility available until December 31, 2025. This measure is designed to improve corporate liquidity and expedite project implementation, particularly as Portugal faces the 'guillotine rule' which could lead to the loss of unspent European funds.
A second instrument will be established to allow businesses to access the refundable portion of their incentives through commercial banks at a zero-interest rate. This mechanism is inspired by a successful model from the Portugal 2020 framework, which effectively doubled the number of companies supported by European funds. The third instrument aims to assist companies with their mandatory equity contributions by providing a BPF-backed guarantee for third-party loans. "It is an eight-year financing with a two-year grace period, where the banks cover the risk and the Banco de Fomento covers the guarantee," Mr. Regalado explained. This can cover up to 75% of the non-incentivized portion of an investment.
The BPF's operational update highlighted that the results of the last eight months have already surpassed those of the previous four years combined, with a goal to make 2025 a record year for non-pandemic-related activity. The construction sector has submitted 1,754 applications for financing, totaling €433 million, representing 12% of the value sought. The highest concentration of applications originates from the districts of Lisbon and Porto, with 651 and 601 proposals, respectively, underscoring the intense economic activity in these metropolitan areas. The implementation of these new financial instruments and housing credit lines represents a significant state-led intervention to shape the nation's economic trajectory and directly tackle challenges within the real estate sector. Understand policy impacts on your Portugal property plans at realestate-lisbon.com.
