Small and medium-sized enterprises (SMEs) are crucial for the economic development of a country, playing an important role in job creation, poverty alleviation and economic growth. SMEs play a major role in most economies, particularly in developing countries. SMEs account for the majority of businesses worldwide and are important contributors to job creation and global economic development. In Albania, SMEs represent more than 99% of the total number of enterprises and the percentage of employees in this sector is 82% (INSTAT, 2023). For this reason, identifying factors affecting the development of SMEs in Albania is very important, in order to take all the necessary steps to reduce barriers as well as create opportunities and facilities for supporting this sector. Small and medium-sized enterprises play an important role in the development of the national economy, influencing sustainable growth in the agriculture, services, trade, and production sectors. They are major contributors to value creation across all sectors. The development of SMEs, especially in transition countries faces several difficulties such as limited access to finance, increased competition, low research and development costs, high levels of exposure to risk, technological change, and capacity constraints related to knowledge and innovation. As an important factor for economic growth and employment, it is important to evaluate the performance of SMEs in the country as well as the constraints and challenges they face. The purpose of this study is to analyze and evaluate the factors that affect the sustainable development of the SMEs sector. The findings of the study are relevant to government, policymakers and managers to address these challenges, to encourage and offer support to SMEs’ development through their strategies.