SMEs 

CROWDFUNDING SPARKS NEW FUNDING MODEL FOR SAUDI MSMES

The Small and Medium Enterprises (SME) Bank recently launched the second phase of its “agency model”, aimed at supporting and empowering micro, small, and medium enterprises (MSMEs) through bespoke financial solutions.

The initiative is being implemented in partnership with debt-based crowdfunding platforms Manafa, Lendo, and Tameed, with a financing target of SAR 240 million for 2025. 

The agency model operates through debt-based crowdfunding, where funds are allocated by SME Bank, and the platform manages the portfolio on its behalf under specific conditions. The funds are then allocated to directly finance MSMEs, offering flexible financing terms with repayment periods of up to 12 months.

The programme provides financing amounts ranging from a minimum of SAR 50,000 to a maximum of SAR 1 million, depending on the needs of the benefiting enterprises and their credit assessment. Additionally, it includes a grace period of up to three months for certain products, granting entrepreneurs greater flexibility in managing their financial obligations.

The programme’s first phase enabled over SAR 88 million in financing to numerous MSMEs across various sectors, boosting their financial sustainability and stimulating economic growth. Building on this success, the second phase aims to expand the pool of beneficiaries and accelerate access to financing in a more integrated and digital-driven manner. It will enable start-ups and e-commerce businesses to obtain financing more easily, further supporting their growth and development. 

The bank also encouraged entrepreneurs and SME owners to apply and take advantage of the available financing opportunities through the "financing gateway”. According to SME Bank, this phase will contribute to the continued support of projects with sustainable economic impact, enhance opportunities for expansion and growth, and enable enterprises to achieve their operational and investment goals with greater flexibility

SME GROWTH

Saudi Arabia’s entrepreneurial landscape saw a significant surge at the end of 2024, with the Small and Medium Enterprises General Authority, or Monshaat, reporting a 67% jump in new commercial registrations in the fourth quarter alone. The total number of SMEs across the kingdom now stands at 1.6 million – a striking indicator of the momentum behind the country’s growing private sector. 

The growth was led by Riyadh, which accounted for nearly 40% of the new registrations, underscoring the capital’s status as the country’s business and innovation hub. Makkah and the Eastern Region followed with 17% and 16%, respectively, while other regions like Qassim and Aseer also saw steady activity. The remaining 17% of SME registrations were distributed across the rest of the country, pointing to increasingly broad-based entrepreneurial participation. 

STRONG BUSINESS SENTIMENT

The SME Monitor Report also explored the shifting priorities among Saudi Arabia’s SMEs. Sustainability takes centre stage, with the report focusing on how SMEs are integrating practices like renewable energy adoption, circular economy principles, reforestation efforts, and electric vehicle use into their operations. It also highlights growing interest in environmental tourism and participation in national sustainability initiatives.

Monshaat also highlighted flows in venture capital funding for start-ups. 

“After a liquidity crunch in 2024 that saw VC levels drop 44% YoY in Saudi Arabia and 41% in the wider region, analysts expect to see a much larger number of mergers and acquisitions and IPOs in Saudi Arabia particularly in 2025,” Monshaat noted in the report. “Despite this dip, the kingdom still led the Middle East in VC funding with USD 750 million invested in Saudi-based start-ups in 2024.” 

This includes the launch of Sustainability Champions Program, a government initiative designed to create bridges between large corporations and SMEs. Through this programme, smaller enterprises can learn directly from the sustainability strategies of more established firms. 

SMEs are also central to the kingdom’s shift towards sustainability across a range of key sectors. From energy and water management to agriculture, tourism, and smart infrastructure, the country is deploying green technologies and carbon reduction strategies to build a more resilient and environmentally conscious economy. 

Sustainability is also taking root in agriculture through the adoption of water-efficient irrigation systems, organic farming, and greener supply chains.

In tourism, community-based and eco-friendly travel options are reshaping the industry with a focus on environmental stewardship. Meanwhile, investments in electric vehicles, low-emission logistics, and public transport projects like the Riyadh Metro are transforming transportation. The healthcare sector is embracing digital platforms and preventative care, reducing its environmental footprint while improving public wellbeing.

In construction, green building standards and sustainable materials are becoming the norm, driving a more energy-efficient and climate-resil-ient urban landscape.