This chapter examines green loans and sustainability-linked loans (SLLs) as innovative financing mechanisms for small and medium-sized enterprises (SMEs) seeking to align growth with environmental sustainability. It highlights the mechanics of green loans, which channel proceeds exclusively toward environmentally beneficial projects, and SLLs, where loan terms are linked to sustainability performance targets. The discussion underscores the importance of environmental performance indicators, loan covenants, and transparent reporting protocols in enhancing accountability. Key challenges faced by SMEs, including collateral constraints, knowledge gaps, and competition from larger firms, are critically analyzed. Illustrative cases are used to demonstrate successful approaches that expand SMEs’ access to green finance. The chapter concludes with policy recommendations to strengthen SMEs’ capacity for sustainable transitions.