This paper analyses the impact of financial and capability constraints on the scientific and innovative activity of Small and Medium Enterprises (SMEs) in Ireland, the inter-relation (i.e. complementarity) between financial and capability constraints, and the input/output additionality on science and innovation associated with firms overcoming these constraints. Merging five waves of the Community Innovation Survey with firm-level financial and staff data, the paper constructs detailed, novel indicators for measuring financial and capability constraints. These indicators are then applied by means of panel-data econometric techniques to a rich firm-level dataset of SMEs in Ireland. The results indicate that financial constraints do not constitute a constraint for firms’ scientific and innovative activity. In contrast, the paper finds robust evidence that capability constraints hinder firms’ scientific but do not represent a constraint to firms’ innovative activity. In addition, the paper finds evidence to ascertain that financial and capability constraints are substitutes for each other. Finally, the paper finds that overcoming financial constraints is not associated with an increase of firms’ intensity of expenditure in scientific activity nor in firms’ likelihood to innovate. Overcoming capability constraints however is found to lead to significantly higher levels of firms’ scientific activity, but this has no impact on firms’ likelihood to innovate.