| dc.description.abstract | Microfinance credit is a source of financial services for entrepreneurs and small
businesses lacking access to banking and related services. Microfinance is “the
provision of financial services to low-income poor and very poor self-employed
people”. The research was aimed at investigating the effects of micro-finance credit
on the financial performance of Small and Medium Enterprises (SMEs) in Kiambu
County, Kenya. According to the National Micro and Small Enterprise Baseline
survey of 1999, there are close to 1.3 million SMEs employing nearly 2.3 million
people or 20% of the country's total employment and contributing 18% of the overall
GDP and 25% non - agricultural GDP. The formal banking sector in Kenya over the
years has regarded the informal sector risky and not commercially viable. The
purpose of the study was to establish the effect of microfinance credit on financial
performance of SMEs in Kiambu. This research problem was studied through the use
of survey design. Out of the 2,061 SMEs licensed, according to Kiambu County
records by February 2013 this study randomly sampled 60 SME‟s. The study found
that there is a direct relationship of access to credit and financial performance of the
companies. The study also concludes that the enterprises benefit from loans from
microfinance institutions, the SMEs seek financial assistance from the MFIs due to
interest rate, easy loan repayment and amount offered. There is need to provide an
enabling environment for SME‟s to grow and thrive, therefore there is a need to
develop strategies to enhance increased access to microfinance credit by SME‟s from
commercial banks and microfinance institutions. It is important for the government to
set up policies that will ease microfinance credit to SME‟s. | en_US |
