The Small and Medium Entrepreneur program - Stret Pasin Stoa - is funded by the government through the National Development Bank which lends money to people who wish to start a business.
"Government is now putting money into commercial banks so that people can borrow and go into business," O'Neill said at the opening of a convenience shop in Port Moresby.
"When credit becomes affordable more businesses can move forward.
"Our government has put close to a hundred plus million kina into the NDB for people to borrow and start up businesses."
He also said that he would like to see more Papua New Guineans participate in the SME sector and hopes their number will increase with government help.
"We need more Papua New Guineans to operate their own businesses, who can then employ more people and make an even greater contribution to communities around the nation," he said.
"So in the next four to five years, the challenge for the government, NDB, Minister for Commerce and Trade and other government ministers, is to help Papua New Guineans to make use of these opportunities and get into business."
Despite the well-meaning and enthusiastic support, PNG Today reported NDB CEO Des Yaninen saying that only 10 applications were successful from 5000 loan submissions.
While commending the bank for its efforts, O'Neill said getting more people owning and operating their own business is a challenge for the government, but would prove beneficial in the long term.
"This is so that Papua New Guineans do not expect hand-outs but go the bank, borrow, work hard and repay at an affordable rate," he said.
Part of the government's initiative to foster the SME sector is to lockout foreign ownership of small and medium businesses, and ‘reserving space' for locals according to Trade, Commerce and Industry Minister Richard Maru.