Hungary’s “biggest-ever” SME program? 95% of businesses shut out

Hungary’s much-touted Sándor Demján Capital Program is being hailed as the country’s “largest-ever SME program.” But behind the headlines, a closer look reveals an uncomfortable truth: most of Hungary’s small- and medium-sized enterprises (SMEs) are excluded before they even apply. The initiative looks less like systemic reform and more like another case of political spin—designed for the few, marketed to the many.

A long-standing problem

For more than three decades, Hungarian SMEs have faced what experts often describe as chronic capital poverty. Under-capitalized, overleveraged, and trapped in a cycle of stagnation, many businesses have found sustainable growth nearly impossible. In this context, a large-scale equity program is not just welcome—it is long overdue.

According to marketingcountry.hu, the real question, however, is whether the Demján program provides meaningful solutions, or whether it simply creates the illusion of reform.

The program in detail

Launched as part of the broader Sándor Demján Program, this flagship initiative offers equity-like capital of HUF 100–200 million per company, at a heavily subsidized annual rate of just 5%. Businesses can apply with no collateral and 0% equity contribution, making the scheme far more attractive than market financing.

The funds may be used for a wide range of purposes: expansion, acquisitions, digitalization, renewable energy, marketing, hiring, and even management buyouts. By design, it appears highly flexible.

Administration is shared between the Hungarian Chamber of Commerce and Industry (MKIK), the National Capital Holding (NTH), and the Hungarian Development Bank (MFB). With HUF 100 billion allocated, the government calls it a “historic” program.

The catch: eligibility

Officially, the target group includes Hungarian micro, small, and medium-sized enterprises. But the fine print tells a different story. To qualify, firms must have:

• At least two closed financial years
• Minimum two employees
• At least 50% Hungarian ownership
• Average annual revenue of at least HUF 300 million (€750,000)

This is where reality bites. According to the Hungarian Central Statistical Office (KSH), there are around 902,000 registered businesses in Hungary, 99% of which are SMEs. Yet:

• 73% are sole proprietors or employ fewer than two people → automatically excluded.
• The vast majority of micro-enterprises (2–9 employees) generate far below the €750,000 threshold.

By conservative estimates, over 95% of SMEs are excluded. In fact, 99% of micro-enterprises cannot even apply.

Numbers don’t lie

As of July 2025, just 55 companies had received support, with a combined allocation of HUF 10.8 billion. The program aims to reach 500–600 firms. Set against the SME universe, that equates to a participation rate of just 0.06–0.07%.

Even when focusing only on small and medium-sized firms (excluding micro-enterprises), the reach is no more than 1.2–1.4%. Put simply: the top 5% of SMEs benefit, while the rest are left behind.

Beyond the spin

Hungary’s micro-enterprises—some 850,000 firms employing 1.3 million people—remain outside the frame. They are the foundation of the economy, yet they continue to be treated as marginal players. This neglect is not just poor economics; it reflects bad governance.

Hungary has consistently lagged behind its Central and Eastern European peers. One major reason is the failure to empower micro-enterprises, the grassroots innovators who drive local employment and regional growth. Countries that nurture their SMEs outperform Hungary on competitiveness, productivity, and innovation.

A structural chokehold

The problem is not unique to this program. Hungary’s policy design systematically disadvantages smaller firms. A clear example is the 2025 EU VAT reform, which allows SMEs across the Union to expand cross-border under simplified rules. While many CEE countries set generous domestic thresholds, Hungary maintains one of the lowest in Europe: just €45,000, compared with the EU’s €85,000 benchmark. The result? Around 80% of Hungarian micro-enterprises are excluded from benefiting.

This is not accidental. It reflects a pattern of structural barriers that punish small businesses for growing, locking them out of simplified schemes available to their European peers.

Conclusion: reform or regression?

The Sándor Demján Capital Program may provide valuable capital to a handful of firms. But for the overwhelming majority of Hungarian SMEs, it is yet another reminder of exclusion. True reform would tackle structural weaknesses head-on: higher thresholds, easier tax regimes, and accessible capital for the micro-enterprises that form the real backbone of the economy.

Instead, Hungary is left with a flagship program that strengthens a narrow elite, while being marketed as a solution for all. In reality, it is little more than regression dressed up as reform.

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