This chapter explores the role of Islamic FinTech in advancing circular small and medium-sized enterprise (SME) finance and highlights its potential to align ethical finance with sustainable development. By integrating Shariah-compliant principles with digital innovations including crowdfunding, peer-to-peer lending, blockchain, and smart contracts, Islamic FinTech creates inclusive pathways for financing resource-efficient and socially responsible enterprises. The chapter shows how these platforms foster transparency, accountability, and financial inclusion, enabling SMEs to adopt circular business models that minimize waste and promote regeneration. It also identifies key regulatory, technological, and market constraints that limit the scalability of Islamic FinTech, including fragmented regulatory standards, weak digital infrastructure, and limited investor awareness. The chapter concludes with policy recommendations to harmonize regulations, strengthen digital infrastructure, and enhance integration with broader financial systems in order to support resilient and sustainable economic growth.