Closing Saudi Arabia’s SME Funding Gap With Alternative Lending and Supply Chain Finance: The SME Financing Saudi Arabia Shift

The SME financing Saudi Arabia conversation is increasingly about speed, data, and where financing can be embedded. SMEs are often described as the backbone of economic diversification in the Gulf. Data cited by erad says SMEs contribute approximately 50 per cent of regional GDP and employ two-thirds of the workforce. Yet the same source points to a major constraint: a regional financing gap estimated at $250 billion. That gap matters in Saudi Arabia because it can limit working capital, hiring, and the ability to take on larger contracts.

Alternative lenders are positioning themselves as practical complements to bank credit, not just substitutes. In December 2025, erad announced a $125m facility led by Jefferies, designed to support expansion within the Kingdom of Saudi Arabia and the wider region, where demand for alternative financing is described as surging. The deal is also positioned as Jefferies’ first asset-backed financing transaction in the GCC, signalling international institutional interest in the region’s fintech ecosystem. erad’s co-founder, Salem Abu-Hammour, framed the approach as “embedding financing directly into existing supplier and platform relationships” to make working capital “as accessible as a payment transaction.”

On the product side, alternative lending is also getting more specific about use cases and larger tickets. erad said the new capital will allow expansion beyond historically consumer-focused sectors into manufacturing, logistics, distribution, and real estate services. It also said it is offering ticket sizes of up to SAR 10million. This matters for SMEs that need bigger working-capital lines tied to purchase orders, receivables, and day-to-day operations, especially when traditional underwriting can be slow or hard to access for smaller firms.

Supply Chain Finance Moves From Concept to Workflow

Supply chain finance is also becoming more “in-workflow,” especially in construction procurement. Forbes reported that BRKZ expanded embedded finance services after raising $8 million of Series A funding in March 2024 and an additional $8 million at the beginning of the following year. Its model targets a common issue: “SME contractors often struggle to raise funding from the banks.” The platform’s financing helps contractors borrow to buy materials for the next stage of projects, bridging the gap until they get paid by their own clients. A user at AlFanar Contracting said tailored payment terms helped execute multiple projects across Saudi Arabia more efficiently while meeting tight deadlines without the usual financing hurdles.

Fintech lenders are also leaning on transaction data to make faster credit decisions for smaller firms. In September 2025, Forbes reported that HALA raised $157 million of Series B financing to support Saudi micro businesses. The report said many micro businesses struggle to raise finance, and that banks may see them as too small and volatile for an attractive risk-return trade-off. HALA started with point-of-sale terminals, then added more services, and uses the data from these relationships to make “well-informed and speedy decisions” about lending. Forbes also noted other players and moves, including Nayla Finance raising $4 million, Lendo launching a crowdfunding platform, and Aajil targeting construction firms.

Closing the SME financing Saudi Arabia gap also depends on infrastructure that reduces friction and risk for secured and receivables-based lending. GTR highlighted standardisation of legal documentation and transaction processes to enable secure and efficient transactions without excessive cost or bespoke structuring. It also pointed to the creation of a Public Registry of Security Interests, allowing creditors to register security interests over movable assets, including receivables, equipment and inventory. Banks are modernising, too. FinTech Futures reported that Riyadh-headquartered Arab National Bank, with approximately $75 billion in total assets, implemented Intellect’s eMACH.ai Digital Transaction Banking platform to improve cash management for corporate and SME clients, including near real-time visibility into cash positions and enhanced automation across payments and reporting.