Abstract:
SMEs have been recognized as the engine that drives economic growth and development
through creation of job opportunities as well as providing most of the needed goods and
services. Despite SMEs significant contribution to country‘s wellbeing, many factors
hinder their growth and development chief among them being availability of financing
for the emergence, growth and development of SMEs.
The purpose of this study was to determine/establish factors limiting small and medium
enterprises access to credit in Uasin Gishu County in Kenya. The literature explored in
this study outlined financial access theories, credit access empirical literature as well as
factors that dictate credit access. In this study, SMEs specific characteristics formed the
independent variables that influence the dependent variable (being awarded a credit
facility). The study used a descriptive approach where 392 SMEs in Uasin-Gishu County
were sample and interviewed using an interviewer administered questionnaire. From the
findings, the study concludes that majority of SMEs in the county did not for credit
facilities citing reasons of complex application procedures, high interest rate, and
insufficient collateral and poor record keeping. Only 27% of SMEs who applied loans
were granted and majority of the rejected applicants cited lack of adequate collateral and
inadequate historic information as the reasons of the decline of application. The study
also revealed that increasing age and number of employees increased the probability of
being awarded a loan facility. It also found out that men had higher chances of getting a
credit facility as compared to women.
