The government has set an ambitious target to increase bank financing for small and medium-sized businesses (SMEs) to Rs. 2 trillion by June 2028. The move is part of a wider plan to improve access to loans and support businesses that often struggle to get financing from banks.
Small and medium-sized businesses play an important role in Pakistan’s economy. They provide jobs, support local markets, produce goods and services, and contribute to exports. However, many small businesses find it difficult to get bank loans because of strict requirements, limited financial records, lack of collateral, and complicated application processes.
The government now wants to change this situation by making business financing easier and increasing the amount of money available to SMEs.
According to government officials, SME financing stood at around Rs. 1.067 trillion by the end of August 2026, covering nearly 324,000 borrowers. The target is to increase this financing to Rs. 2 trillion by June 2028 while also expanding the number of businesses receiving loans to around 775,000.
Government Wants More Businesses to Get Bank Loans
The plan is part of the government’s broader Access to Finance Plan 2026–2028, which aims to improve access to affordable financing for several important areas of the economy.
These areas include SMEs, agriculture, housing, exports, information technology, renewable energy and other productive sectors.
Prime Minister Shehbaz Sharif has repeatedly stressed the need for easier access to bank financing. He has said that better access to credit can help businesses increase investment, improve production, create new jobs and support exports.
Under the plan, the government wants banks to play a much bigger role in providing loans to smaller businesses.
At present, many banks mainly focus on larger companies because they are considered easier to assess and more secure borrowers. Smaller businesses, meanwhile, can face difficulties proving their income, showing proper financial records or providing assets as security.
The government’s goal is to make the banking system more open to these businesses.
SME Financing Could Reach Rs. 2 Trillion
The most important target is to increase SME financing to Rs. 2 trillion by June 2028.
The government had already set a medium-term target to increase SME financing to Rs. 1.5 trillion by June 2027 and then reach Rs. 2 trillion by June 2028.
This means banks will have to significantly increase the amount of credit they provide to small and medium-sized businesses over the next two years.
The government also wants to increase the number of SME borrowers from around 324,000 to 775,000Â during the same period.
This is an important part of the plan because simply increasing the total value of loans would not be enough. If most of the additional financing goes to a small number of larger businesses, many smaller companies would still remain outside the formal banking system.
By increasing the number of borrowers, the government hopes that more businesses will be able to access formal financing.
Share of SME Loans to Rise
Another major target is to increase the share of SME financing in total bank lending.
The government wants this share to rise to 13 percent by June 2028. Current figures put SME financing at around 9.9 percent of domestic private advances.
This would represent a major change in the way banks distribute credit.
For years, small businesses in Pakistan have complained that getting bank financing is difficult. Banks often ask for property or other assets as security, while many small businesses operate from rented locations or do not have enough assets to use as collateral.
The new approach is expected to encourage banks to look at other factors when deciding whether a business can repay a loan.
New Credit Assessment Methods Being Considered
One of the steps being taken by the government and banking sector is the use of alternative methods to assess small businesses.
The government has reviewed a credit-scoring pilot involving 13 banks. The aim is to improve how banks assess the financial position of businesses and reduce their dependence on traditional collateral-based lending.
This could be especially useful for businesses that have regular sales and cash flow but do not own valuable property.
For example, a small shop may have a stable customer base and regular income but may not have a large building or other assets to offer as security. Under a more flexible system, the bank could consider the business’s cash flow and other financial information when assessing its ability to repay.
Such a system could help bring more businesses into the formal lending system.
Government Creates Stronger Oversight
The government has also introduced a three-level structure to monitor the Access to Finance programme.
Prime Minister Shehbaz Sharif is leading the top-level committee, while the Finance Minister chairs the steering committee with the Governor of the State Bank of Pakistan serving as co-chair. Separate sub-committees have also been planned for SMEs, agriculture, IT, renewable energy and housing finance.
The purpose of this structure is to make sure that the financing targets are not only announced but also followed and implemented.
The government wants regular monitoring of banks and their lending performance.
A scoring system is also being introduced to assess how well banks are meeting their lending targets. The bank providing the highest amount of financing to the business sector, especially SMEs, is also expected to receive a special annual award.
Why Small Businesses Need Easier Financing
Small businesses are an important part of Pakistan’s economy, but many entrepreneurs have limited access to formal finance.
A business may have a good idea, customers and the potential to grow, but without enough working capital it can be difficult to expand.
A shopkeeper may need money to increase inventory. A small manufacturer may need funds to purchase machinery. A technology company may require financing to hire workers and develop a product. An exporter may need working capital to complete a large order.
Without access to loans, many such businesses are forced to depend on personal savings, family support or informal lenders.
This can limit their growth.
The government believes that improving access to formal bank financing can help businesses invest in their operations and become more productive.
More Loans Could Create Jobs
One of the biggest expected benefits of the plan is job creation.
When a small business receives financing, it can use the money to open a new branch, buy equipment, increase production or hire additional workers.
If thousands of businesses receive financing, the combined impact could be much larger.
The government has linked easier access to credit with higher investment, greater production and increased employment.
This is particularly important for Pakistan, where millions of people depend on small businesses directly or indirectly for their income.
A stronger SME sector could also create opportunities outside major cities by helping businesses expand in smaller towns and rural areas.
Financing Can Also Support Exports
The government’s financing strategy is not limited to businesses that sell products in the local market.
SMEs involved in exports are also being given greater attention.
In September 2026, the government announced that the Export Finance Scheme’s overall envelope had been increased from Rs. 1 trillion to Rs. 1.5 trillion for FY2026-27. It also set aside Rs. 300 billion specifically for SME exporters, agriculture-related SMEs and new borrowers.
This could help smaller exporters deal with one of their biggest challenges: working capital.
An exporter often needs to spend money on raw materials, labour, packaging and transportation before receiving payment from an overseas customer. Bank financing can help bridge this gap.
If more small businesses are able to export, Pakistan could benefit from higher foreign exchange earnings and a wider export base.
Government Has Already Taken Several Steps
The plan to increase SME financing to Rs. 2 trillion is not a single measure. It is part of a series of steps being taken by the government and financial authorities.
In July 2026, the Finance Minister announced the creation of a dedicated SME Finance Task Force. The task force includes the State Bank of Pakistan, Pakistan Banks’ Association, SMEDA, business chambers and the Finance Ministry. Its purpose is to recommend practical steps to expand SME lending.
The government has also been working on a wholesale financing framework that could help banks reach more businesses.
The Access to Finance Steering Committee discussed this framework and stressed the need for suitable controls and clear rules before its implementation.
Challenges Still Remain
Although the Rs. 2 trillion target is significant, reaching it will not be easy.
Banks need reliable information to decide whether a business can repay a loan. Many small businesses do not maintain detailed accounts or complete financial records.
Some businesses also operate outside the formal tax and banking system. This makes it harder for banks to assess their actual income and financial position.
Another challenge is the risk of bad loans.
Banks must balance the government’s goal of increasing lending with the need to protect their own financial health. Simply giving loans without proper checks could increase defaults and create problems for banks and borrowers.
For this reason, better credit assessment systems will be important.
Need for Simple Loan Procedures
For small businesses, the loan application process can sometimes be as difficult as the lack of financing itself.
Entrepreneurs may have limited time and staff to deal with lengthy forms, repeated visits to banks and complicated documentation.
If the government wants to increase the number of SME borrowers from around 324,000 to 775,000, the process will need to become easier and faster.
Digital applications, better credit data and simple documentation could help.
Banks could also develop loan products designed specifically for different types of small businesses.
A Major Opportunity for SMEs
If properly implemented, the government’s plan could create a major opportunity for Pakistan’s small business sector.
The increase from around Rs. 1.067 trillion in SME financing at the end of August 2026 to Rs. 2 trillion by June 2028 represents a major expansion.
At the same time, increasing the number of borrowers to 775,000 would allow many more entrepreneurs to enter the formal financial system.
For business owners, access to financing could mean more stock, better machinery, additional workers, larger production and new markets.
For the wider economy, stronger SMEs could mean more jobs, higher investment, increased exports and greater economic activity.
What Happens Next?
The success of the plan will depend on how quickly banks and government institutions turn the targets into actual loans.
The government has already increased its focus on SME financing and created several committees and working groups to monitor progress.
The next major challenge is implementation.
Banks will need to prepare clear plans to increase SME lending. At the same time, regulators will have to make sure that the lending process remains responsible and that borrowers are protected from unnecessary costs and complicated conditions.
The government will also need to continue improving financial data and credit assessment systems so that banks can confidently lend to businesses that may not have traditional forms of collateral.
Conclusion
Pakistan’s government is aiming to increase financing for small and medium-sized businesses to Rs. 2 trillion by June 2028. The number of SME borrowers is also targeted to rise from around 324,000 to 775,000, while the share of SME financing in bank lending is expected to reach 13 percent.
The plan shows that the government sees small businesses as an important part of future economic growth.
Easier access to loans could help entrepreneurs expand their businesses, purchase machinery, increase production, hire workers and explore export markets.
However, achieving the target will require more than setting a large financing goal. Banks must make loan applications easier, use better methods to assess businesses and reach entrepreneurs who currently have little or no access to formal credit.
If these measures are implemented effectively, the Rs. 2 trillion financing target could become an important step toward building a stronger and more active SME sector in Pakistan.
Read Also: check
