Minibonds for SMEs: What They Are and How They Work

SMEs need diversified and flexible financing tools because their needs do not always align with those of traditional lenders, particularly banks. That is why the Minibonds, debt instruments designed specifically for medium- to large-sized companies that are not large or well-established enough to issue traditional bonds.

Minibonds are debt securities with a face value of less than 50 million euros for unlisted SMEs, with features tailored to the size and financial needs of this type of business.

The placement methods also offer a new level of flexibility: the security can be privately subscribed by one or a few professional investors, but it can also be offered online to a broader audience of both professional and retail investors (for joint-stock companies) through the debt crowdfunding.  

The result is a structured yet agile, professional yet flexible debt instrument that offers an additional avenue for SMEs to pursue their growth objectives. In this article, we’ll therefore take a closer look at What Are Minibonds for SMEs?, how they are issued, and when they can be a useful financing option.

What Are Minibonds? 

Minibonds are bonds (for corporations) or debt securities (for limited liability companies) issued primarily by unlisted companies to raise capital. These are medium- to long-term instruments, typically used to finance growth plans and extraordinary investments or refinancing transactions.

Each issue must not exceed 50 million euros.

Anyone who subscribes to the security becomes a creditor of the company and acquires the right to receive a return in accordance with the established terms and to have the principal repaid by the specified maturity date.

The return on a Minibond is set at the time of issuance and is described in the security’s terms and conditions. The main component is typically the interest rate, which determines the amount paid to investors in exchange for the capital they provide.

The rate can be:

• fixed, when it remains unchanged for the entire term of the security;
• variable, when it changes based on a benchmark and the terms set forth in the contract;
• linked to specific objectives, when it may increase or decrease depending on whether predetermined economic, financial, or sustainability targets are met.

Interest is generally paid through periodic coupons. Payments may be made annually, semiannually, or as otherwise specified in the regulations.

Principal can also be repaid in different ways. In a bullet repayment, the company pays interest periodically and repays the entire principal at maturity. In an amortizing plan, on the other hand, the principal is repaid gradually over the life of the security. We have taken a closer look at the different types of amortization plans in a dedicated article.

Like standard bonds, Minibonds can also be traded and listed on the stock exchange.

What is the difference between a bond and a minibond?

There is no fundamental difference in how bonds and minibonds function financially. Both are instruments through which an entity raises debt capital, committing to pay a return and to repay the amount received.

The distinction primarily concerns the issuer's profile and the structure of the transaction.

Traditional bonds are typically associated with large companies, banks, or public agencies and are issued for large amounts, spread out over the regulated market and traded by a very large number of investors.

Minibonds, on the other hand, are primarily linked to SMEs and privately held companies. The offering has more flexible terms; it is structured based on a specific financial plan and can be subscribed to by one or a few professional investors or distributed through crowdfunding platforms. The process is simplified but still complex.

How the Issuance and Placement of a Minibond Work

The process of issuing Minibonds depends on the issuer’s characteristics, the amount to be raised, and the type of investors to whom the security is intended to be offered. It generally involves financial and legal advisors, intermediaries, and, in some cases, rating agencies or entities that provide guarantees.

Issuance and placement are two distinct stages:

• with the’emission, the company creates the security and sets its terms;
• with the placement, the security is offered to investors and subscribed to.

Determining the Amount and Terms

The starting point is identifying the financial needs: How much capital is needed? For what project? How long will it take to generate the funds needed to repay it?

The intended use of the capital must be sufficiently specific. Citing a general need for liquidity makes it more difficult to assess the viability of the transaction and to explain to investors how the funds will be used.

The key characteristics of the security are defined based on the project:

• total amount of the issue;
• duration;
• interest rate;
• coupon frequency;
• methods of principal repayment;
• any possibility of early repayment;
• guarantees;
• contractual obligations incumbent upon the company.

The maturity date and the amortization schedule must be consistent with the payback period of the investment. 

The minibond terms and conditions may also include covenant, that is, commitments that the company makes to investors. These may involve, for example, meeting certain financial metrics, limiting the amount of new debt taken on, or maintaining certain guarantees.

The Company's Economic and Financial Analysis

Before offering the Minibond to investors, the financial advisor or arranger managing it must verify that the company can meet both its interest payments and principal repayment obligations. Any professional investors who may be interested also usually conduct their own due diligence.

The analysis primarily takes into account financial statements, profitability, assets, existing debt, and the ability to generate cash flow, as well as the credibility of the business plan.

The goal is not only to determine whether the company is eligible for financing, but also to identify risk-based conditions. A company with stable earnings, low debt, and predictable cash flows will typically offer a lower return than a company that is more exposed to market fluctuations.

The transaction may involve a public rating or a credit assessment reserved for investors. 

Guarantees provided by the company, its shareholders, or third parties may also be required. 

The parties involved in the issuance

An SME rarely has all the necessary expertise in-house to structure and issue a minibond. For this reason, the process typically involves multiple parties, each with different roles.

L'financial advisor It helps the company assess the feasibility of the offering, determine the amount, develop the financial plan, and prepare the presentation for investors.

L'arranger It structures the transaction and may be responsible for identifying potential subscribers and negotiating the terms. In some transactions, the roles of advisor and arranger may be performed by the same entity.

I legal and tax advisors They verify the compliance of the offering, draft or review the offering circular, and analyze the tax and corporate implications.

Depending on the facility, the following may also be involved:

• a credit rating agency;
• a guarantor;
• an intermediary responsible for placement;
• a bank acting as a payment processor;
• the custodian or the entity responsible for centralizing the securities;
• the market operator, if the security is listed.

The company must also prepare the resolution authorizing the issuance as required by its corporate form and verify that its articles of incorporation permit the transaction. For limited liability companies, in particular, the ability to issue debt securities must be provided for in the articles of incorporation.

Placement 

Once the terms of the Minibond have been defined, the security must be subscribed to. In a traditional placement, the arranger presents the transaction to a select group of professional investors, such as private debt funds, banks, insurance companies, asset management firms, or other specialized operators.

The subscription may be carried out by a single investor, who finances the entire issue, or by multiple parties. In either case, the process generally takes place through direct and confidential discussions. 

Investors review the documentation, examine the business plan in detail, and can negotiate changes to the terms initially proposed. Obviously, the fewer the investors, the greater their bargaining power.

A possible listing on a dedicated market

After issuance, the Minibond may be admitted to trading on a dedicated market for buying and selling. The Italian segment created specifically for Minibonds is now the’Euronext Access Milan Professional Segment, an evolution of the previous ExtraMOT PRO³. 

A public listing can offer several advantages:

• greater visibility among investors;
• availability of standardized information on the security;
• the ability to transfer the investment to the market;
• creation of a historical record that can be used for any future emissions;
• greater familiarity on the part of the company with the obligations of the capital markets.

Admission to trading requires the preparation of specific documents and compliance with disclosure requirements, which entail certain costs. The cost-effectiveness of this process should therefore be evaluated by considering the size of the offering, the pool of subscribers, and the company’s financial objectives.

The Limitations of Traditional Placement for an SME

Placing securities with professional investors offers the advantage of dealing with parties who possess financial expertise and the ability to invest substantial amounts. However, this is not necessarily the most suitable approach for all SMEs.

One limitation is the limited pool of participants. The process depends on the interest of a small number of investors, who receive numerous proposals and select only those that align with their investment strategy.

SMEs may also find themselves negotiating with parties who have more experience and bargaining power. Guarantees, covenants, and yields may therefore reflect not only the issuer’s actual risk, but also the limited number of available alternatives.

The Alternative to Traditional Financing: Debt Crowdfunding

Since 2019, Minibonds can also be placed through crowdfunding campaigns on authorized platforms: We're talking about debt crowdfunding campaigns.

Before the online campaign is launched, the company must pass the platform’s selection process and provide the documentation needed to evaluate the campaign. 

When the campaign launches, interested investors can publicly review the terms of the offering and subscribe to a portion of it until the target amount—which is the campaign’s goal—is reached.

In this way, the company’s overall funding needs can be met through contributions from multiple parties, rather than necessarily relying on a single lender or a small number of investors.

All professional investors, as well as retail investors in the case of campaigns launched by corporations.

La difference from lending crowdfunding The difference is that here, all investors subscribe to the same security under the same terms, whereas in lending, each investor enters into a loan agreement with the company.

The advantage, however, isn't just the ability to find more investors. Crowdfunding makes it possible to transform a financial transaction into an activity of Communication, Public Relations, and Business Development. 

For an SME that is already known to investment funds and is interested solely in raising capital, a traditional offering may be a more straightforward option. Debt crowdfunding, on the other hand, may be a better fit when the company wants to broaden its pool of investors and use the offering to strengthen its market position and relationships with the market. 

Who Can Issue Minibonds

From a legal standpoint, there is only one requirement for issuing these securities: they may issue Minibonds All non-financial corporations organized as S.p.A.s and S.r.l.s with financial statements that have been duly approved.

Therefore, Minibonds cannot be issued by banks, insurance companies, securities brokerage firms (SIM), asset management companies (SGR), or partnerships; nor can they be issued by companies without a financial track record.

However, there are practical requirements that are just as important: 

• a sufficiently reliable track record of financial performance;
• revenue and margins that allow for an assessment of business performance;
• cash flows sufficient to cover interest payments;
• a sustainable level of debt;
• a credible business plan.

To issue Minibonds, therefore, a company must be financially sound and have predictable cash flows sufficient to cover the redemption and interest payments on the securities. It must also have a well-structured and organized governance framework capable of managing an ongoing and transparent relationship with investors and intermediaries.

Minibonds for SMEs: What Projects Can They Finance?

Minibonds are particularly well-suited for financing projects with a medium- to long-term time horizon and with sufficiently predictable financial results. They are therefore not a tool to be used to address a general need for liquidity, but rather as part of a specific, measurable plan that is consistent with the company’s ability to repay the debt. 

1. Investments intended to increase production capacity, improve efficiency, or renew the company’s product or service offerings: these include the purchase of machinery, the digitization of processes, and research and development activities.

In these cases, the Minibond allows the cost of an investment—which is expected to yield benefits over multiple fiscal years—to be spread out over time. However, the term of the security must be consistent with the time required to complete the project and begin generating returns. 

2. Funding for commercial or geographic expansion: opening new locations, entering foreign markets, expanding e-commerce, acquiring a competitor, integrating the supply chain, etc.
3. Rebalancing of Financial Sources: Minibonds allow you to diversify your sources of financing so you don't have to rely solely on bank loans.

The Minibond Market in Italy: The Latest Data

The Italian Minibond market saw significant growth in 2025. According to the 12th Italian Report on Minibonds of the’Minibond Observatory According to the Politecnico di Milano, the Italian companies that issued at least one Minibond during the year were 196, the 13% more compared to 174 in 2024. Of these, 132, equal to 67%, were SMEs. 

Because some companies carried out multiple transactions, total emissions were 214, up by 5% compared to the previous year. Their face value reached 2.01 billion euros, with growth of 32% compared to 2024. 

The growth in value was more pronounced than that in the number of transactions, indicating an increase in the average size of the issues. 

The maturity of the Minibonds also confirms that they are used primarily to finance medium- to long-term projects: in 2025, the average maturity of the securities was 5.7 years. The average yield on fixed-rate issues was 7,68%, while the equivalent variable rate stood at 6,38%.

Most securities continue to be placed without a listing and without an external rating. In 2025, only 11 minibonds were listed on Euronext Access Milan, and the 10% Emissions It had a rating from an authorized agency.

One new development that could support the growth of Minibonds is the possibility of using the State Guarantee Fund for SMEs for the placement of these securities through crowdfunding platforms.