<p>Enterprise innovation is the first driving force to enhance the core competitiveness of enterprises, to promote the upgrading of industrial structure, and to lead the macroeconomic transformation. This paper studies the effects of Internet lending on small and medium enterprises’ (SMEs’) innovation investment. Based on a nationwide survey on SMEs, this study indicates a substantial positive relationship between Internet lending and SMEs’ innovation investment. Moreover, this effect is conditioned by firms’ organizational and managerial characteristics. In particular, entrepreneurs’ education level and internal compensation incentives strengthen the extent to which Internet lending is translated into innovation investment. Furthermore, we document a joint moderating effect of Internet lending, entrepreneurs’ education, and the compensation gap between entrepreneurs and employees on SMEs’ innovation investment. These findings provide valuable insights into alleviating the SMEs’ financing difficulties and promoting their innovative development. This study not only enriches and develops the relevant literature in the field of SMEs’ innovation and Internet lending, but also provides important practical significance for the business practice of SMEs and government policy formulation.</p>