In a sign of a deep shift in the structure of financing within Saudi Arabia’s economy, and reflecting the goals of Vision 2030 to diversify the production base, credit facilities extended to micro, small and medium-sized enterprises reached a record high at the end of 2025.
Banks and finance companies injected around SAR 467.7 billion ($124.5 billion) into the sector last year, marking a 33 percent annual increase. The surge highlights the transition of these enterprises from the margins of economic activity to the center, positioning them as a key driver of non-oil growth and job creation.
On a yearly basis, total facilities rose 33 percent from about SAR 351.7 billion ($93.6 billion) in 2024, according to monthly bulletin data from the Saudi Central Bank (SAMA).
The banking sector accounted for the largest share, with facilities provided by banks reaching approximately SAR 446.6 billion, up 34 percent year on year. Finance companies contributed around SAR 21.1 billion, an annual increase of 15.4 percent.
By enterprise size, growth rates varied. Lending to medium-sized firms rose 18 percent year on year to SAR 220.9 billion. Small enterprises recorded stronger growth of 34 percent, reaching SAR 163.5 billion. Micro-enterprises saw the sharpest increase, with facilities surging 97 percent to SAR 83.3 billion, underscoring a notable expansion in financing to this segment.
Structural shift
The strong growth has been driven by several factors, most notably the clear strategic direction under Vision 2030, which places SMEs at the heart of economic diversification, along with the expanding role of institutions supporting the sector.
Among these is Monsha’at, which has helped improve the business environment and connect enterprises with funding sources, according to economist Hussein Al-Attas.
“This level of facilities is not just a record figure. It reflects a structural shift in the philosophy of financing within the Saudi economy,” Al-Attas told Asharq Al-Awsat.
He identified four main drivers behind the growth: a clear economic vision, a stronger regulatory environment, the expansion of credit guarantee programs, and a shift in how banks view the SME sector.
The Kafalah program has been particularly important, helping reduce lending risks and enabling banks to increase exposure to SMEs. This has coincided with improvements in financial data quality and governance practices, which have strengthened lenders’ confidence in the sector.
Sustainable growth
Al-Attas said the current trend reflects not a temporary expansion in credit but a redefinition of the role of SMEs in the economy, with growth expected to continue over the medium term.
However, he pointed to several challenges that could affect the pace of expansion. These include limited managerial expertise in some firms, the risk of defaults if financing is poorly managed, concentration of lending in specific sectors, and the potential impact of future interest rate increases.
Authorities are aware of these risks. This is reflected in a growing focus on improving governance, strengthening management efficiency, and linking financing more closely to actual operating performance to ensure funds are directed toward sustainable and productive activities.
The importance of this expansion extends beyond the headline figures. It supports a higher contribution of SMEs to non-oil GDP and plays a central role in job creation, given the sector’s labor-intensive nature.
According to Al-Attas, the growth also strengthens economic diversification by supporting the entry of new firms into promising sectors such as technology, industry, and services. It also increases local value added and reduces reliance on imports and large corporations.
Looking ahead, he expects financing growth to continue at a healthy pace over the next three to five years. This outlook is supported by the expansion of digital financing solutions, continued integration between government and banking sectors, and improving market maturity and enterprise quality. Large-scale projects and non-oil expansion are also expected to create new financing opportunities, gradually shifting the focus from the volume of funding to the quality of its economic impact.
Digital transformation
Mohammed Al-Farraj, senior head of asset management at Arbah Capital, said the development reflects alignment between ambitious government policies aimed at raising SMEs’ contribution to GDP to 35 percent and a responsive banking sector that has led the growth and captured the largest share of financing.
He noted that guarantee and incentive programs, as well as the SME Bank, have played a key role in reducing credit risks and boosting banks’ willingness to lend.
Digital transformation and the rise of fintech companies have also marked a turning point by improving access to financing and lowering operating costs. This has created a more flexible and attractive environment for business growth beyond traditional constraints.
Despite these positive indicators, Al-Farraj cautioned that rapid expansion requires strategic vigilance, particularly regarding credit risks and potential defaults amid interest rate volatility and increased competition in sectors such as retail.
He continued that the next phase will require a shift from quantitative growth, focused on expanding financing volumes, to qualitative growth that emphasizes credit quality, project sustainability, and resilience to economic changes.
Alternative financing tools such as venture capital are expected to play a growing role. These tools can ease pressure on bank balance sheets while directing funding toward strategic sectors including technology, tourism, and industry to ensure meaningful value creation in the national economy.
Developments seen in 2026 suggest early returns from this expansion. These include the emergence of a new generation of high-growth firms, increased SME contribution to non-oil exports, and greater use of instruments such as sukuk tailored for SMEs as a cost-effective long-term financing option.
Al-Faraj said SMEs are no longer a peripheral segment but a central driver of innovation and growth in Saudi Arabia’s economy. Sustaining this momentum will require continued regulatory development and more flexible repayment mechanisms to ensure durable growth aligned with long-term economic development goals.
