SMEs represent a significant share of business companies in Europe. Their limitations might be overcome by using value chains, resulting in successful development and growth also within traditionally low-digitalized, natural fiber-based domains. Reaching a sustainable competitive advantage for natural fiber-based value chains is possible by boosting the digitalization of the included SMEs. The digitalization level can be improved by properly addressing the detected digitalization issues and challenges. This paper aims at proposing a novel comprehensive approach for assessing the digitalization level of natural fiber-based value chains and the respective SMEs. Using the proposed dimensions, indicators, and corresponding measurement instruments, the digitalization level of a particular SME, as well as of the entire value chain of SMEs can be assessed. The paper additionally depicts a practical demonstration for applying the proposed approach within two case studies. The proposed approach favors low-digitalized SMEs to enter and benefit from the digitalized value chains, as well as provides the benefits and facilitates the growth and sustainability of the existing natural fiber-based value chains.