{"id":98913,"date":"2025-07-21T00:00:00","date_gmt":"2025-07-21T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/ksa\/2025\/07\/21\/smes-need-more-flexible-financial-structures-to-thrive-sukna\/"},"modified":"2025-07-21T00:00:00","modified_gmt":"2025-07-21T00:00:00","slug":"smes-need-more-flexible-financial-structures-to-thrive-sukna","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/ksa\/2025\/07\/21\/smes-need-more-flexible-financial-structures-to-thrive-sukna\/","title":{"rendered":"SMEs need more flexible financial structures to thrive -Sukna"},"content":{"rendered":"

The Saudi SME landscape is rapidly expanding and evolving<\/strong>, buoyed by government spending \u2014 and SME financing needs are expanding, too. Hot on the heels of getting approval for MENA\u2019s first open-ended, sharia-compliant direct lending fund, we talked to Sukna Capital\u2019s CEO Fares Bardeesi, to find out what SMEs need from financial structures \u2014 and what businesses can do themselves \u2014 to get the finances needed to keep the lights on and expand their operations. <\/p>\n

The Kingdom is bent on giving SMEs the lifelines they need:<\/strong> Monshaat, the SME Bank, the National Development Fund, and Kafalah, among others, are making a lot of progress in ramping up SME lending, aiming to reach the 20% target laid out in Vision 2030. The share is still hovering around the 9% level as of 3Q, with the SME financing gap estimated at to exceed SAR 300 bn.<\/p>\n

The hangup? Finance structures are yet to keep up. <\/strong>Traditional banks are designed to meet the needs of large corporates with standardized, collateral-driven products, Bardeesi told us. Meanwhile, most SMEs do not have formal credit records and operate with variable cashflows. They need faster, more flexible financing tailored to the realities of SME operations.<\/p>\n

A more adaptive approach is needed: <\/strong>Financial institutions need to incorporate real-time data, cashflow-based underwriting, and sector-specific analysis to assess SME viability, Bardeesi said. Risk assessment and decision-making could also benefit from the use of technology by adopting automated data collection, predictive analytics, and digital onboarding.<\/p>\n

Regulations are evolving:<\/strong> The Saudi Central Bank (Sama) and the Capital Markets Authority (CMA) have been introducing sandbox frameworks and licensing pathways that led to the rise of flexible lending structures, Bardeesi notes. \u201cThe recent approval of Sukna Capital\u2019s open-ended credit fund is a strong example of how capital market regulation is already evolving to accommodate new structures \u2014 such as private debt funds and revenue-based financing vehicles \u2014 that are built specifically with SMEs in mind.\u201d<\/p>\n

More work needs to be done: <\/strong>Expanding risk-sharing tools such as first-loss mechanisms and co-investment models can drive private sector participation. Tax incentives and streamlined licensing for non-bank financial institutions will also be critical in scaling alternative lending, according to Bardeesi.<\/p>\n

SMEs have a part to play too: <\/strong>Many SMEs lack formal reporting practices or systems to track financial performance, making it harder for lenders to assess their creditworthiness, Bardeesi told us. Adopting cloud accounting or cashflow monitoring tools can help improve visibility, with the help of government and ecosystem partners.<\/p>\n

\u201cBankability isn\u2019t only about having audited financials<\/strong>,\u201d Bardeesi noted. Lenders \u2014 including Sukna Capital \u2014 are already focusing more on actual performance when making underwriting decisions, checking if companies can demonstrate predictable revenue, operational discipline, and showing sector-specific strengths. \u201cIf more of the market adopts that view, we\u2019ll see a meaningful shift in how capital flows to high-potential SMEs,\u201d Bardeesi said.<\/p>\n

DATA POINT- Financing for micro, small, and medium enterprises (MSMEs) jumped 30.6% <\/strong>y-o-y in 1Q<\/strong>, reaching SAR 383.2 bn, according to the Sama\u2019s latest monthly report (pdf)<\/a>. MSME credit accounted for 10.1% of total credit facilities in the Kingdom during the quarter, up from 8.9% in the same period last year. Medium-sized enterprises received the lion\u2019s share with SAR 190.2 bn \u2014 a 18.4% increase y-o-y.<\/p>\n","protected":false},"excerpt":{"rendered":"

Traditional banks are designed to meet the needs of large corporates<\/p>\n","protected":false},"author":1,"featured_media":98914,"comment_status":"","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"newspack_ads_suppress_ads":false,"newspack_popups_has_disabled_popups":false,"newspack_sponsor_sponsorship_scope":"","newspack_sponsor_native_byline_display":"inherit","newspack_sponsor_native_category_display":"inherit","newspack_sponsor_underwriter_style":"inherit","newspack_sponsor_underwriter_placement":"inherit","ep_exclude_from_search":false,"_primary_brand":0,"newspack_featured_image_position":"","newspack_post_subtitle":"","newspack_article_summary_title":"Overview:","newspack_article_summary":"","newspack_hide_updated_date":false,"newspack_show_updated_date":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[2590],"tags":[57,10,3810],"brand":[],"newspack_spnsrs_tax":[],"class_list":["post-98913","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-debt-watch","tag-debt-watch","tag-enterpriseam-ksa","tag-sukna-capita","wpautop","entry"],"acf":{"mongo_id":"0b7268d9-b6f4-46af-bfe8-4a55e882277e","order":"7","is_powered_by":false,"story_type":"1","photo_url":"https:\/\/ent.news\/2025\/7\/942.jpg","photo_position":"above","homepage_title":"","full_issue_title":"SMEs need more flexible financial structures to thrive -Sukna","related_issue":[98901],"teaser":"Traditional banks are designed to meet the needs of large corporates","voice_url":"https:\/\/s3.us-east-1.amazonaws.com\/ent.news\/audio\/2025\/7\/.0251f73d-26c4-47a6-a103-1e1b045bf80f.mp3"},"yoast_head":"\nSMEs need more flexible financial structures to thrive -Sukna - 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