ZCG Arabia Insights Paper Highlights SAR 300 Billion+ SME Financing Gap and Growing Role for Shariah-Compliant Private Credit in Saudi Arabia
SME lending reached SAR 467.7 billion in 2025, yet remains at 11.3% of total bank lending against the Kingdom’s Vision 2030 target of 20%
Saudi Arabia’s SME financing landscape is entering its next phase as businesses expand, capital requirements become more complex, and the Kingdom continues to advance its Vision 2030 objectives for SME and private-sector growth.
ZCG Arabia’s latest insights paper, “Closing the Gap: Shariah-Compliant Private Credit and the Next Phase of SME Finance in Saudi Arabia,” examines the evolution of the Kingdom’s SME financing ecosystem and the potential for private credit to complement traditional bank financing as businesses develop increasingly sophisticated capital requirements.
The paper highlights the significant progress made in expanding access to SME finance, with outstanding SME credit reaching approximately SAR 467.7 billion (US$124.5 billion) at the end of 2025, representing approximately 33% year-on-year growth. Despite that expansion, SME lending accounted for only 11.3% of total bank lending, compared with the Vision 2030 target of 20%.
Based on the different between current SME lending levels and the Vision 2030 objective, ZCG Arabia estimates a financing gap of more than SAR 300 billion (US$80 billion). The estimate is based on ZCG Arabia’s internal analysis and has not been independently verified.
Authored by James Zenni, Founder, President & CEO of ZCG, and published in July 2026, the insights paper examines how this financing gap increasingly reflects the needs of established, fundamentally strong businesses rather than solely companies unable to secure traditional financing.
As the Saudi economy continues to diversity and businesses grow, SMEs are seeking capital for expansion, acquisitions, capital expenditure, supply-chain investment and working capital optimisation. Private credit can complement the role of commercial banks by providing tailored financing solutions to high-quality businesses whose requirements may extend beyond conventional bank lending, broadening the range of capital solutions available across the SME market.
The paper also highlights the potential role of Shariah-compliant private credit at the intersection of two structural trends: continued demand for Shariah-compliant investment solutions and the limited supply of institutional-quality private credit.
Saudi Arabia is one of the world’s largest Islamic finance markets, with demand for institutional investment opportunities developing across institutional investors, family offices, and private wealth. ZCG Arabia’s direct financing platform was established to address the evolving needs of businesses operating in the Kingdom through Shariah-compliant financing solutions supported by ZCG’s global private credit expertise.
The strategy focuses on senior secured and asset-based structures, along with additional Shariah-compliant financing solutions tailored to the needs of high-quality Saudi SMEs, with an emphasis on disciplined underwriting, capital preservation, downside protection, and rigorous risk management.
“Saudi Arabia’s financing landscape is entering an important next phase as the private sector continues to expand and businesses develop increasingly sophisticated capital requirements,” said James Zenni, Founder, President & CEO of ZCG. “Banks will remain fundamental to the Saudi economy, but there is a clear opportunity to broaden the financing ecosystem with additional sources of institutional capital. This is where Shariah-compliant private credit can play an important role in that evolution by providing flexible, senior secured financing to high-quality businesses while giving investors access to private market opportunities aligned with Islamic finance principles. The opportunity ahead is significant, and we are focused on building a platform that can contribute to the continued development of Saudi Arabia’s private capital markets.”
Zenni continued, “Through our KSA direct financing platform, we are focused on combining ZCG’s private credit experience with the broader operational and technological capabilities of our platform. We believe this approach can support businesses beyond a traditional financing relationship and help position them for long-term, sustainable growth.”
As Saudi Arabia continues to advance its economic diversification agenda, a broader and more diversified financing ecosystem will be important to supporting the next stage of private-sector growth. The development of private credit alongside banks, government-backed initiatives, and other sources of capital can expand financing options for established SMEs while increasing the pool of institutional capital supporting the real economy.
ZCG Arabia’s Shariah-compliant direct financing platform forms part of this evolving landscape, seeking to provide tailored capital and operational capabilities to support businesses across the Kingdom while contributing to the continued development of Saudi Arabia’s private capital markets.
To read the full paper, please visit click here
