The transition towards sustainable development has made green finance a pivotal mechanism for encouraging small and medium-sized enterprises (SMEs) to adopt environmentally sustainable practices. This chapter explores the role of green finance as a catalyst for promoting sustainability within small businesses, addressing key pathways, challenges, and policy implications. Green finance encompasses financial instruments such as green bonds, concessional loans, and grants, designed to facilitate sustainable investments and operations. Despite their crucial role in economic development, SMEs often face resource constraints, limited access to financing, and a lack of awareness regarding green finance options. This chapter delves into the theoretical foundations connecting green finance and small business sustainability, examines the financial instruments available, and identifies the barriers impeding SMEs’ access to these resources. It further explores the role of institutional and policy frameworks in creating an enabling environment for green finance, ultimately fostering long-term environmental sustainability within SMEs. Through this discussion, the chapter highlights the importance of policy interventions, stakeholder engagement, and financial product innovation to ensure that small businesses can tap into green finance and contribute to sustainable economic development.