The circular economy (CE) is a more holistic approach that advocates towards extracting the value from the waste and reaching sustainability goals. The objective of the present study is to highlight the prospects, impediments, and prerequisites while transiting from the linear economy (LE) to CE of SMEs. The study gathers information on prospects, impediments, and prerequisites for the transition of LE to a CE from recent studies. A semi-structured interview questionnaire was prepared, and a survey was conducted on representatives of six SMEs. Further, six caselets were developed to understand the prospects, impediments, and prerequisites based on the findings of the interview and previous information gained from existing literature.The major prospects favoring transition from LE to CE found in the study are significance of 3R (reduce and reuse and recycling) approach, CE leads to competitive advantage, recycling attracts consumers in few cases, CE helps in achieving sustainability goals and reuse of materials are significant in resource conservation.There are certain impediments found such as issues associated with awareness, recyclability issues, financial challenges, and weak management vision of SMEs towards CE implementation. Other resource-based impediments were found related to trained employees, lack of experience. Whereas, consumer acceptability is also a major concern towards implementing CE. The findings of the study suggest major prerequisites towards CE implementations such as strong "management will," innovation, technology up-gradation, training to employees, motivation, and appropriate guidelines. Government pressure to implement CE cannot be an effective step towards the transition of LE to CE.circular economy (CE), circular economy impediments, circular economy prerequisites, circular economy prospects, linear economy (LE), recycling, sustainable development, waste management 1 | INTRODUCTION LE is the conventional system and has been practiced for a very long time, but it does not give a driving force towards sustainable development (Ghisellini & Ulgiati, 2020). LE only focuses on the procurement of raw material, manufacturing, and converting it into a finished product and disposal. LE not much talks about regaining the value from the end-cycle of the product. The major challenges of LE