Financing for small and medium enterprises in Pakistan has more than doubled in two years, reaching around Rs1,110 billion by June 2026 compared with Rs491 billion in June 2024, State Bank of Pakistan Governor Jameel Ahmad said on Friday. Speaking at the Lahore Chamber of Commerce and Industry, he also reported a sharp rise in the number of SME borrowers, from 177,000 to 325,000 over the same period, signalling wider access to formal credit for smaller businesses.
Small and medium enterprises form the backbone of Pakistan’s economy, accounting for a large share of employment and a significant portion of manufacturing, trade and services. Yet for many years, SMEs have struggled to obtain bank finance, often because of collateral requirements, complex paperwork and banks’ preference for lending to larger, established borrowers. The doubling of financing therefore represents a notable shift in the credit landscape.
A key change highlighted by the governor was the increase in the collateral-free financing limit, which has been raised from Rs10 million to Rs50 million. Collateral, or security offered against a loan, has historically been one of the biggest barriers for small businesses, many of which lack property or other assets acceptable to banks. Raising the limit for loans that do not require collateral could open borrowing to a much wider group of entrepreneurs, particularly in services, trade and light manufacturing.
Simplification of the application process is another part of the effort. A one-page application form has been introduced for SME financing, replacing longer and more complex procedures that often deterred small business owners. For many entrepreneurs, time and paperwork are real costs, and a shorter form can make the difference between applying and giving up. It also signals a shift towards treating SME lending as a standard, accessible product rather than an exceptional one.
Digital infrastructure is also being strengthened. The SME Connect Portal is set to become operational on 1 November 2026, providing a platform to connect SMEs with financing options, information and support. Such portals can help businesses understand what is available, compare products and track applications, while also helping banks and regulators monitor lending patterns. Its launch, just days after the governor’s remarks, will be watched as a test of how effectively digital tools can support SME growth.
Export finance received attention as well. The limit under the Export Refinance Scheme has been raised from Rs1 trillion to Rs1.5 trillion, with Rs300 billion earmarked for SME exporters. Export refinance provides working capital at concessional rates to exporters, helping them fulfil orders and manage cash flow between production and payment. Reserving a substantial share for SMEs recognises that smaller exporters often face the greatest financing constraints, even though they contribute to export diversification and employment.
For Lahore’s business community, the governor’s address at the chamber provided both data and direction. Lahore and Punjab are home to a large concentration of SMEs, spanning textiles, engineering, food processing, retail and services. Improved access to finance in this region could support expansion, modernisation and job creation, provided that businesses can also navigate energy costs, market conditions and regulatory requirements.
The growth in SME financing also reflects a broader policy effort by the State Bank to encourage banks to lend to underserved segments. Regulators can influence lending through targets, incentives, risk-sharing arrangements and simplified procedures, but ultimate lending decisions rest with banks, which must assess creditworthiness and manage risk. The rise in both volume and borrower numbers suggests that banks have responded, at least in part, to that encouragement.
Challenges remain. Access to finance is only one constraint for SMEs; many also need support with skills, technology, market access and compliance. High interest rates, when they prevail, can also limit borrowing even when limits are raised. And the sustainability of rapid credit growth will depend on repayment performance and on whether new borrowers can use funds productively.
Source: Express Tribune, 31 October 2026
