While living in Berlin in 2018, I really started to realize that the city wasn’t for me. I had already lived in Germany for two years and gone through a difficult process of obtaining my residence permit, setting up my living situation, and going through the surprisingly daunting gauntlet to get internet access. I was also getting tired of the gray and cold weather that lasted the majority of the year and was still finding it difficult to adapt to some of the more challenging cultural aspects of living and working in Berlin. After testing the waters by living in a few countries since 2014, I was ready for a change.
When my wife and I started thinking about where we would be next for us when it became clearer that Germany was not our final destination, she suggested we check out Portugal. I had visited the country four years prior and loved it, but she had never been. So, we decided to visit for the first time in October 2018. We were immediately enamored with the country and even began thinking about moving there while we were still tourists. The charm of both Lisbon and Porto, the capital and second largest city, respectively, really left us breathless and reconsidering our situation in Germany. I had just begun my business Expat Empire as a part-time pursuit and wanted to find a way to make it my full-time endeavor in the coming months. A little less than a year later, a serendipitous opportunity came knocking.
Pushing Forward Through Back-to-Back Layoffs
The company in Berlin I had been working for reduced investment in the project that I was leading, and I was soon put on the chopping block. With Portugal on my mind, I moved quickly to find a company that would hire me there. I eventually received a job offer from a company based in Porto and they sponsored me for a work visa so we could get our residence permits. We moved into an apartment near my office at the end of 2019 and were just starting to feel at home in Portugal when the COVID-19 pandemic struck Europe. The company instituted a work-from-home policy, so the new apartment soon became my workspace as well. My coworkers and I did the best we could to push the business forward remotely in the midst of the situation, but the company’s financial situation was hurt by the downturn and thus I found myself caught up in another round of layoffs right before getting my one-year contract renewed.
Once again, I found myself without gainful employment. However, this time I was more prepared. I decided to take the news as an opportunity to finally start working full-time on Expat Empire. While it took a few years for the opportunity to materialize, I was finally in the position to pursue my dream, and so I soon started looking into how I could make it happen.
Getting Started With Government Assistance
Luckily, Portugal has some decent safety nets in place for citizens and residents alike. My residence permit in Portugal was based on a work visa that my company sponsored. By law, when the situation of a resident changes, they are required to notify the Portuguese government. Since my company was not going to keep me employed and I had worked for at least one year, I was able to file for unemployment benefits and, more importantly, stay as a legal resident in Portugal.
Right after my last day on the job in November 2020, I contacted the local Instituto da Segurança Social (ISS), or social security office, to file for unemployment and begin my mandatory job search. Thankfully, Portugal’s ISS offers a great program to budding entrepreneurs called Lump Sum Unemployment Benefits. Rather than wait for months or years to receive all the unemployment benefits that you’re entitled to, this program enables you to receive all of the unemployment funds that you qualify for upfront to spend on your new business. I decided to pursue this program so I could jumpstart Expat Empire without worrying about searching for another job in the meantime.
For more long-term plans, I decided to apply for another more comprehensive loan through the MICROINVEST program, run by the Instituto de Emprego e Formação Profissional, the government’s employment office. This program provides a bank loan of up to €20,000 that is aimed to help entrepreneurs start their businesses. The loan has a term of seven years, and the program guarantees that the small business doesn’t owe any interest for the first 2 years. Then, the interest is calculated at a government controlled 1.5% rate for the following five years with a requirement to return a portion of the loan amount annually. This consistent source of funding would be the next step in growing my business.
Struggling To Write Loan Applications And Keep The Ball Rolling
Before I could proceed with my entrepreneurial plans, I faced a particularly daunting hurdle. I needed to submit the loan applications and get them approved before I could register my business in Portugal. This means that in the time between filling out applications and registering the business, my wife and I would be living solely off unemployment benefits. It was a firm reminder that I needed to work quickly. Unfortunately, there was one big, yet unsurprising problem: all the instructions were only available in Portuguese and I needed to write the loan application in Portuguese as well!
Thankfully, the IEFP provided me with a list of agencies that would assist me in filling out the application and negotiating with the Portuguese banks. I reached out to five of these companies in December 2020 explaining that I would need help with the process in English. I quickly heard back from one of the agencies and never heard back from the other four, so it was an easy decision as to which agency to choose. In January 2021, we met at their offices in downtown Porto and discussed my project around an enormous and intimidating conference room table. They liked the idea behind Expat Empire and offered to work with me throughout the process. We signed the paperwork and began what I thought would be a fairly quick and painless procedure, but, as with many things in Portugal, it was much more drawn out and involved than I had anticipated.
I started the following weekend writing my detailed business plan and getting all of my documents together. The agency helped me get started by outlining which details should be included in the plan. One part of the business plan included forecasts for my expenses along with the associated invoices in order to justify the loan amount I was requesting. They suggested that I use wage reports and provisional invoices for purchases from companies to help map my expenses. Since I was working with freelancers at the time, I used their invoices to put together the expense budget. I also needed to upgrade my home office in order to really get the business going, so I used some of those proposed expenses to help justify the budget for the loan. I had to go in-person to the electronics store and have them draft a pro forma invoice for the equipment I needed. Crucially, this invoice had to contain my NIF, or Tax ID number, so that they could connect the purchase to my business. I had no idea about pro forma invoices, Portuguese accounting, or any of these essential details before starting this process.
Even though the agency was incredibly helpful in navigating the Portuguese unemployment and banking systems, the application process turned into a long and dragged out ordeal due to the long time it took to communicate with them. While I would typically respond to his emails within a few hours of receiving them, the agency representative assigned to my case would frequently take a week or more to respond to my emails. Because I was so unaccustomed to the business rules and requirements in Portugal, more often than not, the ambiguous language he used would lead to even more questions.
Eventually, he recognized my exasperation and offered to have a call with me so that I could get my questions answered. While he answered the questions I had that day, it continued to take much longer than I had anticipated. What I only realized late in the process was that he would not actually start writing my application until after I had sent him all the documents for the application! In total, even with the help of this agency and my desire to get everything going as quickly as possible, it took four months until the end of April 2021 to complete the MICROINVEST bank loan application.
Persisting Through Further Frustrations Towards The Light At The End Of The Tunnel
Given that I was not yet an EU citizen, there were only two banks that the agency thought would be likely to consider my application. I was told that they were supposed to respond to my application within 30 days after submitting. Surprisingly, one of the banks replied within a few days with some favorable terms. I didn’t jump on this offer right away as I wanted to wait for the second bank to reply to be able to compare the two loan proposals. The second bank took more than the 30-day allowance and ultimately rejected my application because I was not an EU citizen and so they were concerned about the possibility that I would depart the country and leave my debt obligations behind, so I gladly accepted the first bank’s offer.
What followed was another big frustrating lapse in communication. The loan officer I was working with at the bank continually misspelled my email address, sending emails intended to me to someone else with a similar name. Therefore, she thought that I had received her emails and was waiting on me to respond while I was waiting on her reply. Once we discovered this issue weeks later, I had to go to the bank in-person to sign the paperwork to open an account first and then return again a few days later to sign the loan paperwork. As I was finding to be par for the course, there was an issue with the loan paperwork I had signed, so I then had to go to the bank in-person for the third time to sign the actual final loan agreement.
With all of the compounding frustrations and wasted time, I found myself questioning whether I should even proceed with the process. This all took significant time away from working on my business. I just had to keep pushing forward and go through the motions, no matter how annoying they were. Finally, after more than six months had passed since I first met with the agency, I was able to register my business in Portugal in July 2021.
Reflecting On My Entrepreneur Experience In Portugal So Far
While living in Berlin, I was already dreaming of living in Portugal with my wife and working on Expat Empire full-time. After we visited Portugal in 2018 and fell in love with the country, I was even considering working remotely in Portugal with my job in Berlin while I prepared to go all-in on my business.
Of course, my initial plan of continuing my job in Berlin while working remotely in Portugal didn’t work out the way I had planned. I’d say it has actually ended up being even better. Rather than trying to get my residence permit sorted through remote work for a job I didn’t really enjoy, I was able to get settled in Portugal by working for a local employer and then eventually transitioning into entrepreneurship at the right time for me.
Starting a business in Portugal has not been an easy route. Despite all the frustrations and all of the time spent to make it happen, it’s all been worth it in the end. Simply put, my goal for the last three years has been to grow my business while living in Portugal and now I’m doing just that. Life is good!
David McNeill, Founder of Expat Empire