The unavailability of external financing and lack of access to formal finance are topics of significant research interest to academicians and important issues to policy makers around the globe. However compared to large firms, SMEs frequently tend to report financing as amajor obstacle. The financial constraints of SMEs to access to finance are beyond question by many researchers. Thus, this study attempts to discuss the factors that lead to influence financial institutions in lending technologies to provide finance to SMEs in Malaysia. The methodologies on the relationship between the requirements of financial institutional and the type of lending technologies provided for SMEs is illustrate. This conceptual paper is aimed to improved the theoretical parts of analysis, on the factors influencing Financial Institutions on lending technologies to technology-based SMEs in the northern region of Malaysia and identify the challenges issues regarding the requirements of financial providers based on the lending technologies adoption, be it transaction lending or relationship lending. Furthermore, the methodologies will also be able to assist researchers to get more information on the unique needs for finance of SMEs and tailor the finance providers’ requirements to be SMEs friendlier i.e. better meet SMEs ability and needs in order to achieve win-win situation.
