TAIPEI — Taiwan’s small and medium-sized businesses are drawing significantly more financing from domestic banks, with SME lending already surpassing the government’s full-year target after just seven months of 2026.
Domestic banks increased their outstanding loans to small and medium-sized enterprises by NT$535.351 billion (about US$16.8 billion) from January through July, reaching 107.07% of the NT$500 billion annual target set by Taiwan’s Financial Supervisory Commission (FSC).
The increase was the largest for the January-to-July period in nearly a decade, highlighting how strong business activity and technology-sector investment are translating into greater demand for bank financing.
SME Loans Hit NT$11.42 Trillion
By the end of July, outstanding SME loans at Taiwan’s domestic banks reached NT$11.4238 trillion, up NT$132.7 billion from June.
July’s monthly increase was the second-highest for that month on record, behind the NT$148.854 billion increase recorded in July 2020.
FSC Banking Bureau Deputy Director-General Chang Chia-kuei said the growth was supported by Taiwan’s continued economic expansion and increasing business activity.
He also pointed to strong demand from the AI and technology industries, particularly companies in their supply chains, as businesses seek financing for working capital and new operating facilities.
AI Boom Is Reshaping Financing Demand
The numbers provide another indication of how Taiwan’s AI-related economic boom is spreading beyond its biggest technology companies.
As semiconductor and AI-related businesses expand production and investment, suppliers and other companies connected to those industries also require additional financing.
The Ministry of Economic Affairs says Taiwan had approximately 1.71 million SMEs, representing about 98% of all businesses, with the sector employing roughly 80% of the country’s workforce.
That means changes in SME financing can have a broad effect across Taiwan’s economy rather than being limited to individual technology companies.
Banks Still Have Lending Capacity
The rapid increase in SME lending has raised questions about whether banks could face greater liquidity pressure.
However, FSC officials said banks currently have sufficient capacity to support business financing.
Taiwan’s average liquidity coverage ratio (LCR) stood at 115.52% at the end of July, above the regulatory minimum of 100%. Officials also said deposits continued to increase and overall loan-to-deposit conditions remained stable.
The FSC therefore expects SME financing demand to remain relatively steady during the second half of the year if Taiwan’s economy continues to expand.
First Commercial Bank Leads SME Lending
Among Taiwan’s domestic banks, First Commercial Bank had the largest outstanding SME loan balance at the end of July, at approximately NT$1.44 trillion.
It was followed by:
- Taiwan Cooperative Bank: NT$881.2 billion
- Taiwan Business Bank: NT$832.8 billion
- Hua Nan Commercial Bank: NT$807.2 billion
- Mega International Commercial Bank: NT$784.9 billion
Together, these figures underline the major role state-linked and domestic commercial banks continue to play in financing Taiwan’s smaller businesses.
Taiwan’s SMEs Are Becoming an Even Bigger Economic Story
The latest lending data comes as Taiwan considers additional support for its small-business sector.
The government recently moved forward with a proposed NT$100 billion SME assistance program, aimed at expanding support for microbusinesses and other smaller enterprises while improving business environments in commercial districts and public markets.
The broader challenge goes beyond access to credit.
Taiwanese SMEs are also facing pressure to adopt AI and digital technologies, improve data security, reduce carbon emissions and compete for skilled workers.
The government has separately identified AI adoption among SMEs as an important economic priority, with a goal of helping one million Taiwanese SMEs adopt AI technologies.
What Happens in the Second Half of 2026?
The key question now is whether the extraordinary pace of SME borrowing will continue through the rest of the year.
For the FSC, the immediate data point is already clear: Taiwan’s banks exceeded the NT$500 billion annual SME lending target before the end of July.
Officials expect financing demand to remain stable as long as domestic economic growth continues. At the same time, businesses are likely to keep seeking capital for technology investment, facility expansion and day-to-day operations.
The surge therefore offers a snapshot of a wider transformation underway in Taiwan: the AI boom is not only driving semiconductor investment — it is also pulling more companies throughout the supply chain into the financing cycle.
