Developing a sustainable financing channel for nano-entrepreneurs through an interest-free savings-based finance model

Purpose Micro, small and medium enterprises (MSMEs), including nano enterprises, have a strong influence on economies worldwide. Both developed and developing countries depend on this sector for economic development and nation-building. This study proposes a waqf or trust-centric sustainable financing channel for nano-entrepreneurs through an interest-free savings-based finance (SBF) concept, aiming to promote collaboration and cooperation. Design/methodology/approach This conceptual model synthesizes the literature through a multi-theoretical framework, incorporating the resource-based view, dynamic capabilities, institutional and stakeholder perspectives, social capital theory, capital structure theory and Maqasid al-Shariah. It systematically maps Islamic social finance instruments to the financing constraints faced by nano-entrepreneurs and embeds these instruments within community savings mechanisms, such as SBF, which provide governance, enforcement and trust. Findings The proposed model integrates three Islamic financial instruments – gift, qard al-hasan and mudaraba – into an SBF framework to enable sustainable and inclusive access to capital. It addresses financial exclusion through collaborative mechanisms, emphasizing trust-based interactions among nano-entrepreneurs, contributors and intermediary institutions, such as waqf. Conceptually, this configuration reduces selection costs, broadens inclusion and enhances the survival and graduation prospects of nano enterprises. Moreover, it aligns with Sustainable Development Goal sub-targets related to access and resilience (1.4), MSME financing and formalization (8.3, 9.3) and multi-stakeholder partnerships (17.17). Research limitations/implications This study is conceptual and has not been empirically tested. Given the limited research available, definitions and assumptions about nano entrepreneurship are drawn from literature and self-defined criteria. Future research should focus on validating the framework’s acceptability, appropriateness and feasibility through qualitative stakeholder engagement methods such as focus group discussions and interviews. Originality/value As no scholarly research has yet addressed this topic, this study introduces a new paradigm of entrepreneurship to the academic arena, namely, nano entrepreneurship. Furthermore, it represents the first attempt to design a waqf-centric sustainable financing channel for nano entrepreneurship through an interest-free SBF model.