All About SME Banking in Pakistan

These thresholds determine which products and regulatory protections apply to your business. Most SBP-backed schemes and bank products use this definition as the entry point.

The SBP has been working to close these gaps through mandatory SME lending targets, credit guarantee schemes and the promotion of value chain financing. Several banks have responded with dedicated SME units, branch infrastructure, and unsecured or partially secured products.

SBP requires banks to dedicate a minimum percentage of their loan portfolio to SMEs. This pushes banks to actively develop products and outreach programmes rather than leaving SME lending as a residual activity.

SBP operates credit guarantee schemes that partially cover bank losses on SME loans — particularly for businesses that cannot offer full collateral. This is the mechanism that has enabled unsecured SME lending to grow.

Provides subsidised financing to young entrepreneurs at concessionary profit rates.

SBP has standardised the SME loan application process through a single form accepted across banks, reducing paperwork for business owners applying for the first time.

The SBP Sunwai Portal is a grievance redressal mechanism where SME borrowers can register complaints against banks — a protection that larger corporate borrowers rarely need but smaller businesses often do.

The most common need for a growing business is cash to run day-to-day operations — buying raw material, paying wages, managing the gap between invoicing and collection. Banks offer this as running finance (revolving credit) or cash finance facilities.

For larger purchases, like machinery, vehicles and equipment, businesses access term loans with fixed repayment schedules. The loan period ranges from one to seven years, depending on the asset being financed and the bank’s credit assessment.

Businesses that do not want to tie up capital in an outright purchase can lease assets and take ownership at the end of the contract. This is available in both conventional and Islamic banking formats.

Businesses holding agricultural produce, commodities or manufactured goods can borrow against the value of inventory stored in ABL’s own warehouses or obligor-owned premises. This is particularly relevant for traders, manufacturers, exporters, food processors and agricultural businesses who hold stock between buying and selling seasons.

Importers and exporters need letters of credit, guarantees, and bill discounting facilities to manage cross-border transactions. Most major banks in Pakistan have dedicated trade desks for SME clients.

An increasingly common model where a bank finances an entire supply chain — the large anchor manufacturer, along with the smaller suppliers and distributors who depend on it. This reduces the collateral requirement for smaller players because the creditworthiness of the anchor covers part of the risk.

Allied Fast Finance is designed for businesses that need quick access to working capital without going through a lengthy credit process. It targets established businesses with a track record and offers fast approval timelines — useful when a business opportunity or supply purchase cannot wait.

Allied Business Finance caters to businesses requiring larger, structured financing — working capital, term finance or both — with credit assessment based on the business’s financial profile and repayment capacity.

Allied Tijarat is designed for traders and commercial businesses. It covers the full financing cycle of a trading operation: purchasing, storing and selling goods, with facilities structured around the trading cycle rather than a fixed repayment schedule.

Allied Warehouse Financing allows businesses to borrow against goods stored in ABL-owned warehouses. A textile trader sitting on a season’s worth of cotton, or a food processor holding milled flour, can release that locked-up value without selling early at a loss.

Allied Prime Lease is Allied Bank’s lease-to-own product for business assets. Businesses can acquire machinery, vehicles or equipment without an upfront full payment, with ownership transferring at the end of the lease period.

Allied Commercial Alliance supports value chain financing by connecting anchor businesses with their supplier and distributor networks. Smaller businesses in the supply chain benefit from financing backed partly by their relationship with a larger, creditworthy anchor.

Allied Seasonal Support Financing addresses the cash flow gaps that seasonal businesses face. A garment exporter building inventory before a buying season, or an agricultural trader stocking up before harvest, can access short-term cash finance aligned to the business cycle.

Allied Bank participates in the Prime Minister’s Youth Business and Agriculture Loan Scheme (PMYB&ALS), providing access to subsidised financing for young entrepreneurs and first-time borrowers. The scheme is particularly relevant for startups and early-stage businesses that do not yet have a track record for mainstream lending.

Allied Bank’s business banking suite includes the Allied Business Account and Allied Current Account, both designed for high-volume transactional needs. For businesses with Islamic banking requirements, Allied Aitebar offers Shariah-compliant current and savings accounts across the same product range.

LCs give an exporter the assurance that payment will be made once documents are submitted correctly. For importers, an LC commits the bank to paying the supplier, allowing the importer to negotiate better terms.

The SBP’s Export Finance Scheme (EFS) allows banks to refinance export loans at subsidised rates. Many exporters in Pakistan’s five-year export growth story have accessed this scheme through their commercial banks.

When an exporter ships goods on open account terms, the bank can purchase the export bill and advance funds before the overseas buyer actually pays. This resolves the working capital gap that many exporters face between shipment and receipt.

Allied Bank’s Trade Services division covers the full range of these facilities — LCs, guarantees, demand finance, export finance and FBP — accessible through its branch network across Pakistan.