Scaling Up Public Financial and Non‑Financial Support for SME Sustainability

3. SME enablers: Financial and non-financial support mechanisms

Abstract

This chapter explores how public financial and non-financial support can help SME enablers, who are disseminating green technologies and services, to scale up their operations and participate more effectively in domestic and international green markets. Such support may take the form of targeted financial instruments, risk-sharing mechanisms and trade facilitation measures designed to alleviate capital constraints and de-risk investments in green innovation. Complementary non-financial interventions, including business development services and market access support, further enhance the ability of enablers to diffuse green technologies and expand into global value chains.

SMEs act as enablers of the green transition by providing critical products, services, and solutions that facilitate sustainability efforts across industries and communities. These businesses often serve as intermediaries, connecting adopters and innovators of green technologies. For instance, SMEs in renewable energy distribution, such as installers of solar panels or local providers of energy-efficient appliances, help scale green technology adoption. Similarly, waste management SMEs contribute by collecting, sorting, and processing recyclable materials, enabling circular economy practices. Agricultural SME retailers or producers can green agricultural practices through installing water-efficient irrigation systems or providing inputs such as organic fertilisers and bio-pesticides. SMEs in consulting or engineering support larger firms in transitioning to sustainable operations by offering expertise in carbon accounting, energy audits, or sustainable supply chain design. By enabling others to achieve sustainability goals, these SMEs play an essential role in the broader green ecosystem.

The transition presents a range of opportunities for SME enablers. Growing demand for green technologies and sustainable services, from both businesses and consumers, opens new markets. At the same time, evolving policy and regulatory frameworks are increasingly supportive of green investments, encouraging SMEs to adopt and scale sustainable practices and building demand for products and services offered by enablers. In addition, the transition requires significant development of infrastructure and support services, offering further market opportunities for these firms.

At the same time, SME enablers face various challenges. The high up-front costs associated with developing and installing green products and technologies can present a significant barrier (European Commission, 2016[1]). Additionally, scaling operations is challenging due to limited access to capital, slow market adoption, and competition from larger firms which have more resources, better financing options, and established market presence. SME enablers may also lack awareness of relevant support schemes that they could tap into and navigating complex regulatory requirements can be very resource consuming. In addition, uncertainty surrounding the evolution of regulations can raise the risk profile of SME enablers and make their long-term planning and investment more challenging.

Enablers, like many SMEs in general, often face challenges in accessing global value chains (GVCs) due to the need to meet stringent supplier requirements, including quality standards, access networks, or scale production to match demand. Nine out of ten SMEs sell their green technologies only in domestic markets (SWITCH2Green, 2025[2]). Traditionally, SMEs are less likely than larger firms to join business networks, restricting their collaboration opportunities (OECD, 2023[3]). Integrating into GVCs is further complicated by SMEs’ limited internal resources, such as managerial skills, technology, and innovation assets, as well as external challenges like restricted access to trade finance and inadequate physical infrastructure. In EMDEs, two thirds of SME suppliers cited financial constraints as the primary obstacle to integrating into GVCs (Global Partnership for Financial Inclusion, 2017[4]). Many SME enablers also lack digital intensity, missing out on digitalisation benefits that could lower operational costs and facilitate international expansion (OECD, 2023[3]).

3.1. Financial support for SME enablers

Public financial support for enablers can serve several important purposes:

• Reducing upfront costs and financing risks: Risk-sharing mechanisms, such as guarantees, blended finance, and concessional funding, can mitigate upfront costs and financing risks by absorbing potential losses for private financing providers and enabling more favourable financing terms and expanded credit access for recipient SMEs who are disseminating greening solutions.

• Scaling up operations: Public financial support can also alleviate the financial burden of scaling-up and diversifying production and entering new markets, both of which are particularly important for enablers and the broad objectives of the green transition.

• Supply chain integration: Financing instruments like grants, guarantees, or supply chain financing can also help enablers address barriers to supply chain integration or expansion by funding investments in quality improvements, certification processes, or capacity building, which can further be complemented with relevant non-financial support (see section on non-financial support below).

Table 3.1. Common financial support instruments for SME green transition enablers

Financial support instrument	Description	Examples
Direct financing instruments
Sector specific green loans	Direct financing in the form of loans which offer preferential terms such as low interest rates and longer repayment terms for SMEs from specific sectors providing environmental services	Credit to energy service providers installing renewable energy technologies Credit to producers of renewable energy
Sector specific green grants	Direct payments offsetting the high upfront costs of SMEs developing and implementing green technologies	Grants for companies that provide resource efficiency services Funding for installation of clean energy systems
Green revenue-based loans	Direct green financing mechanisms where repayment terms are tied to revenues generated from green projects	Credit to renewable energy producers where repayment is tied to revenues generated from sales
Risk sharing instruments
Credit guarantee schemes	Risk-sharing mechanisms which provide financial guarantees to lenders, reducing the risk of loans for businesses producing green technologies. Green guarantees offer more favourable financing terms than other guarantee instruments	Guarantees for SME renewable energy enablers who are producing renewable energy or installing relevant technologies and systems
Blended finance	Strategic use of public or philanthropic capital to de-risk investments and attract private capital into projects that deliver environmental benefits.	Programmes which provide funding for SME generators and providers of renewable energy solutions
Market based instruments
Mini bonds	Debt issued by SMEs to finance greening investments as well mini bonds issued by SMEs themselves. Differs from other bonds in terms of financing conditions and premia for green performance.	Mini bonds issued by SME enablers to finance sustainable infrastructure projects
Trade instruments
Targeted trade and supply chain financing	Financing that facilitates enablers’ exports or participation in supply chains through mechanisms for easing cash flow challenges or de-risking transactions	Export support for producers of green solutions including clean energy

Public financial support in this category is tailored to SMEs offering green products and services that help other businesses reduce their emissions or improve sustainability. Some relevant instruments in this category include:

Sector-specific loan or grant programmes targeting SMEs in industries such as energy efficiency, recycling and greening service providers, can help enablers access necessary funding to mitigate investment costs and scale up operations. They can be provided directly to SMEs by relevant public development banks or equivalent public institutions. They may also be provided indirectly via financial intermediaries, which can include other public financial institutions, commercial banks or others. Some examples included in Box 3.1 include, for instance, a German debt-financing scheme for SMEs who are generating renewable energy for the electricity grid, covering up to 100% of the investment costs (see Box 3.1). Similarly, Danish SMEs developing clean technologies can access grant funding through the Green Accelerator programme, which provides technical assistance and support services to help them scale and export their green solutions (see case study on the Green Accelerator programme in Annex A).

Revenue-based financing schemes can be very useful for enablers as they offer a flexible alternative to traditional loans, where repayments are tied to a percentage of revenue rather than fixed instalments. This model reduces the burden on cash flow, making it particularly suitable for small sustainable businesses with fluctuating incomes or small businesses that are bringing new products to the market that require the building up of a customer base. In Korea, a revenue-based financing programme is being implemented by the IBK to support solar power generating companies (see Box 3.1).

Market-based instruments, such as green mini bonds, enable SMEs to access capital markets and funding for their green projects. By leveraging market dynamics, these instruments allow SME enablers to enhance their visibility, attract private investment, and secure the necessary funding to scale their green solutions. Subject to less regulatory oversight, mini bonds are often more accessible to SMEs, but to reduce investment risk, they are often backed by public financial institutions through credit enhancements or guarantees. In Italy, for example, green mini bonds from small and medium-sized water utility companies were pooled with the backing of the EIB and CDP for risk mitigation, enabling these utility companies to green their infrastructure (see Box 3.1).

Box 3.1. Examples of direct and indirect financing instruments for enablers

Sector-specific loans

France: The French public development bank Bpifrance is offering financing to SMEs for developing methanisation units which will feed into the gas network. Funding is for low-value tangible and intangible assets, provided in the form of unsecured loans. The loan amount can range from EUR 100 000 to EUR 1 million and has a repayment period of 3 to 12 years.

Germany: The regional L-Bank provides financing to SME renewable energy generators who are feeding their generated energy into the electricity grid or directly selling it. Financed clean energy projects include solar PV projects, hydroelectric power and clean energy generated through wind power. 100% of the investment costs can be financed, with amounts ranging from EUR 5 million to EUR 10 million. Repayment terms are flexible, ranging from 6 to 30 years with grace periods of up to two years. The interest rates are reduced and fixed for up to 20 years. Borrowers can benefit from a 12-month fee-free period for disbursements, after which a 0.15% monthly fee applies to undisbursed amounts. Innovative domains such as Agri-Photovoltaics offer special repayment terms and interest rate reductions.

New Zealand: The New Zealand Green Investment Finance bank is offering debt financing to SMEs who are providing low carbon products, services, or technologies through its Green Finance Accelerator Programme. Lending goes up to NZD 5 million and can be provided in the form of working capital, with a two-year repayment period, or asset finance, with repayment of up to five years. Examples of SMEs who have benefitted from the programme include ‘’Thundergrid’’, which supplies EV charging stations and managing charging networks.

Green synthetic securitisation

Germany: The Landesbank Baden-Württemberg (LBBW) backed by a guarantee from the EIB group is providing financing to SMEs engaged in renewable energy projects. In this green synthetic securitisation operation, the EIB group is providing a guarantee of EUR 175 million on a mezzanine tranche of the LBBW’s portfolio. This operation enables the freeing up of additional capital for LBBW, of which EUR 350 million will be allocated to lending for clean power projects. The intermediated approach enables LBBW to reach smaller scale renewable energy projects, which otherwise would not have been possible to reach directly. Eligible projects include solar energy, wind power, biomass, geothermal and other energy efficient technologies. The programme is expected to generate 340MW of electricity from renewable sources.

Sector-specific grant and subsidy programmes

Denmark: The Export and Investment Fund of Denmark (EIFO) though the Green Accelerator programme supports SMEs in exporting their clean technologies related to areas such as renewable energy, energy efficiency, efficient resource use, and waste management. The programme provides grant funding of up to EUR 300,000 upon project completion. The programme raised DKK 85 million (EUR 11 million) and subsidises costs such as consultancy services, feasibility studies, market research, legal advice, ESG compliance analyses, enabling SMEs to scale green solutions abroad.

Finland: The Investment Aid for Circular Economy programme provides SMEs with funding for initiatives which improve circular economy models of other businesses. Eligible investments for funding include industrial construction projects, such as new circular economy technologies, and digital solutions or innovative production lines which improve waste recycling of other businesses. SMEs can get a maximum of 45% of additional investment costs covered, and the grant can go up to EUR 15 million.

India: The Uttar Pradesh government in India adopted the mini-grid policy in 2016, providing financial support to SME renewable energy generators who are speeding up electrification in rural areas. Supported mini grid projects are those which generate up to 500kW of electricity. SME developers can access capital grants which cover up to 30% of costs, with the government choosing the project location, customer tariff, and technical specifications. Developers must supply 8 hours of electricity for homes and 6 hours for businesses, with the option to sell excess power to other customers. The tariff is Rs. 60/month for 50W, Rs. 120/month for 100W, and for loads above 100W.

Revenue-based loans

Korea: The Industrial Bank of Korea offers the Solar Power Facility Financing Loan to SMEs who are in the solar power industry and contributing to the transition to a low carbon economy. This financing programme offers loans to SMEs which cover up to 80% of the costs for installing solar power systems, with accompanying insurance from an external insurance company. The repayment structure is revenue-based, with 100% of the projected electricity revenue from the generated solar power sold to the Korean Power Exchange (KPX), which will use the produced electricity to repay the loan to IBK. In case of lost revenue, the Korean government fund repays any of the compensation costs to the KPX. This programme covers SME enablers, as well as SME adopters to encourage the take up of solar PV panels.

Market based instruments

Italy: The Viveracqua Hydrobond is an innovative financing mechanism developed in Italy to support small and medium-sized water utility companies in raising capital for infrastructure development and modernisation. This covers areas such as improvements to wastewater treatment, as well as water efficiency and distribution upgrades. It is notable for being one of the first cases where mini-bonds were used in the utilities sector, leveraging a pooling structure to achieve efficiencies and attract institutional investors (i.e. used as collateral for an asset-backed securitisation). This financing mechanism is aimed to support eight small and medium-sized water utilities in the Italian region of Veneto. To lower investment risk and reduce financing costs, the mini bonds have received financial backing from public financial institutions, including EIB and Cassa Depositi e Prestiti (CDP). Five rounds of mini bonds have been issued, following its first successful issuance in 2014.

Sources: (Bpifrance, 2025[5]), (L-Bank, 2025[6]), (NZGIF, 2025[7]), (Business Finland, 2025[8]), (International Energy Agency, 2021[9]), (Indu, 2025[10]), (European Investment Bank, 2014[11]), (CDP, 2022[12]), (EIFO, 2024[13])

Guarantee schemes and other risk-sharing mechanisms facilitate bank lending to SMEs that are delivering green solutions. Unlike standard guarantees, green guarantees are tied specifically to projects with measurable environmental benefits and often come with incentives like reduced fees or technical assistance to promote green investments. In Moldova, for instance, SME renewable energy producers can receive loan guarantees to finance the development and scaling up of their operations (see case study on Moldova in Annex A)

Blended finance combines financing from public and private sources to de-risk high upfront investment costs of green projects or to incentivise the provision and uptake of financing for these types of investments. For example, the Mirova SunFunder Gigaton Fund, a public-private initiative operating in emerging and developing economies, enables the mobilisation of financing for SME generators and providers of solar-generated power (see Box 3.2).

Box 3.2. Examples of risk sharing instruments for enablers

Credit guarantee schemes

Moldova: The Organization for the Development of Entrepreneurship (ODA) in Moldova provided SME renewable energy producers with loan guarantees through its Credit Guarantee Fund. The fund offers guarantees of up to MDL 5 million (EUR 260 000), covering as much as 70% of financing costs. This programme was designed to help renewable energy SMEs access the necessary capital to develop, expand, and scale their operations.

Blended finance

South Africa: The Development Bank of Southern Africa (DBSA), together with the South African Department of Forestry, Fisheries and Environment (DFFE) is managing the Green Fund. R25 million (EUR 1.25 million) have been allocated to fund project preparation support, feasibility, and technical support, and R70 million (EUR 3.7 million) have been designated for investment funding, with the possibility of raising additional funding from other public and private stakeholders. Funding for projects can go up to 15 years, offering a range of financing instruments, such as grants, equity, loans, and guarantees. Selected projects must have a development impact and can cover domains such as improving wastewater treatment, waste management processes, or renewable energy generation and storage installations, amongst others.

EMDEs: The Mirova SunFunder Gigaton Fund is a public-private partnership involving key stakeholders such as the impact investor Mirova SunFunder, Swedfund, and the European Investment Bank (EIB). The fund mobilises both public and private capital to finance SMEs engaged in clean energy generation and distribution through solar energy projects. With a target size of USD 500 million, the fund aims to unlock private sector investments by leveraging public contributions to de-risk the financing structure. The fund primarily provides medium- to long-term debt financing in emerging markets, with an estimated USD 1.2 billion in private debt funding. It focuses on off-grid SMEs operating in regions with unreliable electricity systems, supporting projects such as solar home systems, agri-solar solutions, and e-mobility initiatives

Sources: (ODA, 2025[14]), (European Investment Bank, 2022[15]), (Development Bank of Southern Africa, 2025[16]).

Supply chain financing facilitates the integration of enablers into supply chains by helping to optimise cash flow within supply chains and allowing suppliers, buyers, and intermediaries to access funds tied up in invoices, purchase orders, or inventory. For SME enablers this type of finance can address critical financing barriers and incentivise sustainability throughout supply chains. Green supply chain financing, which is dedicated to greening activities, can entail many different types of financing including early payment programmes, inventory financing for green products, purchase order financing and sustainability-linked financing. This also includes collaborative financing models whereby public financing providers work with large enterprises/buyers in supply chains to devise programmes for supplier greening, leveraging the buyers’ financing or creditworthiness to secure favourable terms for green suppliers. Several examples of green supply chain financing programmes have been included in Box 3.3. For instance, SMEs trading green technologies or services can access long- and short- term trade financing options through the Green Trade Facilitation Programme of the EBRD.

Box 3.3. Examples of trade and supply chain financing for enablers

Canada: Export Development Canada (EDC) is offering trade financing solutions to cleantech SMEs seeking to expand internationally. Support can come in the form of guarantees, loans and working capital. In addition to financial support, the EDC facilitates networking connections through organising Cleantech Export Summits, linking SME enablers with relevant buyers, industry experts, and strategic partners. In 2023, EDC provided CAD 12 billion (USD 9 billion and EUR 8.2 billion) in financing and insurance solutions to more than 440 cleantech companies.

Finland: Finnvera offers export financing on favourable terms to SMEs who are exporting goods and services that meet its climate criteria. Financial incentives can include lower pricing, higher percentage of cover, longer maturity, a more flexible repayment profile or incentives related to collateral requirements or other credit conditions. The climate criteria have been specifically tailored for high-impact sectors such as shipping, energy, and mining. SMEs operating outside these sectors can also benefit from favourable financing terms if they can demonstrate science-based emissions reduction targets aligned with the Paris Agreement.

Spain: The Spanish Export Credit Agency (CESCE) offers green trade credit insurance to support SMEs exporting environmentally sustainable products and services. The financing is provided through coverage in the form of buyer credit and supplier credit, ensuring that SMEs can mitigate the risks associated with non-payment in international transactions. The insurance is intended for green projects in sectors such as renewable energy production, sustainable water management, and sustainable mobility.

International: The EBRD is unlocking trade financing for high performing green technology and services SMEs through the Green Trade Facilitation Programme. Under the programme, the EBRD provides both long term trade financing instruments, such as guarantees in the form of letters of credit and payment guarantees, as well as short term instruments such as loans to partnering banks for on lending to local SME exporters and importers. Since the start of the programme in 2016, the EBRD has provided more than EUR 675 million in green trade finance and facilitated more than 605 000 tonnes of CO₂ in emission savings.

Sources: (EBRD, 2025[17]), (Finnvera, 2025[18]), (EDC, 2025[19]), (CESCE, 2025[20]).

3.2. Non-financial support for enablers

Non-financial support helps SME enablers of the green transition to overcome barriers to scale their products and services and drive the adoption of sustainable practices across industries (Table 3.2). Some of these barriers include:

• Capacity constraints: Enablers often face skill and knowledge gaps that limit their ability to scale effectively. Publicly provided non-financial support, such as targeted technical assistance, sector-specific training, or workshops on compliance with environmental standards, can help these SMEs build their internal capacities. For example, Asian and African SMEs working in the renewable energy sector can participate in the Energy Enterprise Coach programme to access tools, best practices and obtain certificates (see case study on the Energy Enterprise Coach in Annex A).

• Market access: Enabler SMEs frequently struggle to reach industries or customers that could benefit most from their solutions due to limited visibility, resources, or connections. Additionally, given the highly regulated nature of sectors like renewable energy, they require support in navigating compliance and streamlining approvals. Public support in the form of matchmaking services and digital platforms can help them integrate into supply chains, expand market reach, and access financial institutions. The SOARING programme in Southern Africa for instance helps SMEs to perform due diligence risk assessments to gain market access (see case study on the SOARING Programme in Annex A).

• Business development services: These are necessary to address any technical and knowledge skills gap that SME enablers might face. Mentoring, coaching, training, and workshops which teach SME enablers how to scale their solutions and integrate into supply chains are vital. SME enablers also require support on market access, through matchmaking platforms which connect them with relevant partners and consumers (see Box 3.4).

Table 3.2. Non-financial support programmes for SME enablers

Support programme	Description	Examples
Business development services	Assistance in the form of coaching, mentoring, as well as gaining access to training programmes and networks	Workshops on business models and environmental standards compliance
Market access programmes	Resources such as matchmaking platforms and government-backed marketing campaigns	Regulatory compliance assistance

Box 3.4. Examples of business development services and market access support programmes for SME enablers

Southern Africa: The Southern African Renewable Energy Investment and Growth (SOARING) programme aims to improve financing access for clean energy SMEs who are providing solutions to agricultural value chains, for example through distributing solar-powered water pumps to farmers. The programme provides capacity-building and technical assistance, helping SMEs develop business models, prepare project documentation, and implement due diligence and risk assessment measures to access financing. It also supports local financial institutions in extending green finance products to SMEs through providing credit and risk assessment tools. As such, it bridges the knowledge gap between financial institutions and SMEs, enabling SMEs to access the necessary capital for scaling. The project is funded by the International Climate Initiative (IKI) from the German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety, and managed by managed by the non-profit organisation REEEP (Renewable Energy and Energy Efficiency Partnership).

International: The Netherlands Enterprise Agency (RVO) and the Energising Development (EnDev) partnership have launched the Energy Enterprise Coach, offering capacity training to African and Asian SMEs working in the renewable energy sector. The aim is to foster their growth and development through training, advisory and business development services. The Platform offers an E-Learning Platform with case study examples, tools and assignments. At the end of the course, SME renewable energy generators will obtain a certificate. So far, the programme has had 800 E-learning participants, as well as 500 participants in cohort trainings, and 80 entrepreneurs taking part in individual mentoring programmes.

Sources: (Energy Enterprise Coach, 2025[21]), (REEEP, 2025[22])

3.3. References

[5] Bpifrance (2025), ADEME anaerobic digestion loan, https://www.bpifrance.fr/catalogue-offres/pret-methanisation-ademe.

[8] Business Finland (2025), Investment aid for Circular Economy, https://www.businessfinland.fi/en/for-finnish-customers/services/funding/investment-aid-for-circular-economy.

[12] CDP (2022), A new Hydrobond for Viveracqua, https://www.cdp.it/sitointernet/page/en/a_new_hydrobond_for_viveracqua?contentId=PRG41790.

[20] CESCE (2025), New green policies on behalf of the State, https://www.cesce.fr/en/web/guest/cuenta-del-estado/polizas-verdes.

[16] Development Bank of Southern Africa (2025), Green Fund, https://www.dbsa.org/solutions/climate-financing/green-fund.

[17] EBRD (2025), Facts, figures and Green TFP, https://tfp-ebrd.com/.

[19] EDC (2025), Cleantech at EDC, https://www.edc.ca/cleantech.

[13] EIFO (2024), Green Accelerator, https://www.eifo.dk/en/our-solutions/green-accelerator/.

[21] Energy Enterprise Coach (2025), Energy Enterprise Coach, https://ee-coach.com/.

[1] European Commission (2016), Guidebook Series How to support SME Policy from Structural Funds. Improving Resource Efficiency in SMEs.

[15] European Investment Bank (2022), SUNFUNDER GIGATON CLEAN ENERGY SME FUND., https://www.eib.org/fr/projects/all/20220074.

[11] European Investment Bank (2014), VIVERACQUA HYDROBOND, https://www.eib.org/fr/projects/all/20130515.

[18] Finnvera (2025), Climate criteria for export financing, https://www.finnvera.fi/eng/export-and-internationalisation/finnvera-as-an-export-finance-provider/climate-criteria-for-export-financing.

[4] Global Partnership for Financial Inclusion (2017), Financing for SMEs in Sustainable Global Value Chains.

[10] Indu (2025), Consultation with Industrial Bank of Korea.

[9] International Energy Agency (2021), Uttar Pradesh Mini-Grid Policy 2016, https://www.iea.org/policies/6374-uttar-pradesh-mini-grid-policy-2016.

[6] L-Bank (2025), Energie vom Land – Sonne, Wind, Wasser, https://www.l-bank.de/produkte/wirtschaftsfoerderung/energie-vom-land-sonne-wind-wasser.html.

[7] NZGIF (2025), NZGIF Green Finance Accelerator, https://www.nzgif.co.nz/investing/nzgif-green-finance-accelerator.

[14] ODA (2025), What is the ODA Credit Guarantee Fund (CGF)?, https://www.oda.md/en/access-to-finance/credit-guarantee-fund.

[3] OECD (2023), SME and Entrepreneurship Outlook 2023.

[22] REEEP (2025), SOARING (Southern African Renewable Energy Investment and Growth), https://reeep.org/projects_programmes/soaring/.

[2] SWITCH2Green (2025), Green Action Plan for SMEs - Turning environmental challenges into business opportunities.