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RIYADH: ����ֱ��’s lending to small, medium, and micro enterprises rose by 31 percent year on year in the first quarter of 2025, according to recent data from the Saudi Central Bank. 

The total value of facilities reached SR383.2 billion ($102.18 billion), up from SR293.43 billion in the same period last year. 

Of this, 95.12 percent was disbursed by banks, while the remaining 4.88 percent came from finance companies, highlighting the formal sector’s growing involvement in SME credit provision. 

Medium-sized companies — defined as those with revenues between SR40 million and SR200 million and 50–249 employees — accounted for the largest share of loans, receiving SR190.18 billion. 

Small enterprises followed with SR139.6 billion, while micro-enterprises received SR53.43 billion. Notably, micro-enterprises saw the fastest growth, with loan volumes surging by 82 percent year on year, compared to 35 percent for small enterprises and 18 percent for medium-sized firms. 

The lending boom reflects the expanding role of SMEs in ����ֱ��’s economic diversification strategy under Vision 2030. 

Monsha’at, the General Authority for Small and Medium Enterprises, has played a pivotal role through programs like Kafalah — a loan guarantee initiative designed to de-risk lending to SMEs by assuring a portion of the loan value to participating financial institutions. 

This has been instrumental in extending access to credit, particularly for micro and first-time borrowers. 

Despite rising loan volumes, credit access remains a structural challenge. According to the World Bank, SMEs across the Middle East and North Africa region receive only 8 percent of total bank credit, compared to 22 percent in high-income economies. In ����ֱ��, SMEs accounted for just over 9 percent of total loans in 2024 — far below the Vision 2030 target of 20 percent. 

New players are helping bridge the gap. Saudi-based fintech platform Erad recently raised $16 million in a pre-Series A funding round to expand its Shariah-compliant, data-driven SME financing offering, according to Wamda in April. 
The company, which provides funding in as little as 48 hours, says over 60 percent of its clients are first-time credit takers. Since launch, it has processed more than SR100 million in funding and received over SR2 billion in applications, underscoring pent-up demand for fast, flexible finance. 

Meanwhile, digital optimism among Saudi entrepreneurs is on the rise. According to the 2025 Mastercard SME Confidence Index, 93 percent of surveyed SMEs expressed confidence in the year ahead. 

The adoption of digital payments has risen sharply, with 99 percent now accepting them, up from 88 percent in 2023. SMEs cited faster access to revenues, enhanced credibility with financial institutions, and more streamlined transactions as key benefits. 

Data and AI are also seen as enablers of smarter, more inclusive lending. Nearly 97 percent of surveyed SMEs said better data and analytics tools were essential to scaling operations. 

A growing number are prioritizing AI, automation, and cybersecurity in their growth strategies — trends that align with broader efforts to digitize financial infrastructure. 

Lending models must evolve alongside SME needs. Traditional bank lending often requires fixed-asset collateral and extensive documentation, limiting access for tech-oriented or service-based SMEs, according to a June article by International Banker. 

Risk assessment remains based on backward-looking financials, rather than dynamic indicators like sales or payroll data. Fintechs like Erad are disrupting this model by using real-time revenue data to underwrite loans. 

Globally, the credit gap for SMEs stands at $5.7 trillion, with Gulf Cooperation Council countries accounting for roughly $250 billion of that, according to International Banker. ����ֱ��’s efforts to close this gap are gaining momentum. In addition to loan guarantees and fintech innovations, open banking frameworks, SME-focused digital banks, and embedded finance models are helping to lower access barriers. 

Vision 2030 sets a clear target: raise SME contribution to GDP from 30 percent to 35 percent. With over 1.8 million SMEs now operating in the Kingdom, financial empowerment of this sector is not just a policy goal — it is a macroeconomic imperative. 

The path ahead will require deeper ecosystem alignment, tailored credit models, and continued innovation. But the first quarter of 2025 has already signaled a strong start — one that reflects both institutional commitment and entrepreneurial momentum across the Kingdom.