Abstract

This paper presents a strategic conceptual framework for SME (Small and Medium-sized Enterprises) lending that balances risk mitigation with economic development goals. SMEs are crucial to economic growth, innovation, and job creation. However, they often face significant financial challenges due to perceived high risk. The proposed framework integrates key components such as risk diversification, credit portfolio management, and socio-economic impact assessment to guide financial institutions in developing innovative lending strategies. By incorporating these elements, the framework aims to enhance the resilience of lending portfolios while supporting SME growth and contributing to broader socio-economic development. This approach encourages financial institutions to adopt a more holistic view of risk management, aligning their practices with sustainable development goals and fostering inclusive economic growth. The paper also provides practical guidelines for implementing the framework. It suggests directions for future research and policy development further to support SME access to finance and economic resilience.