Abstract

The study sought to establish the factors influencing access to credit among small and mediumscale enterprises in Kitale Municipality. The study was guided by the following objectives: to find out how lending procedures affect access to credit by small and medium scale enterprises; to find out how collateral requirements influence access to credit by SMEs; to establish the relationship between the credit bureau referencing policies and access to credit by SMEs; and to find out the influence of education and entrepreneur training and access to credit by SMEs. A descriptive survey design method was used to collect data. The target population was made up of the 726 SME’s registered with Kitale Municipal Council. Stratified random sampling technique was used to determine the sample size. Using the Krejcie and Morgan formula a sample size of 256 SME’s was considered for the study. Data was collected by the use of questionnaires and interviews. Piloting of the study was carried out in the to ascertain the validity and reliability of the instruments. Data analysis included the use of descriptive and inferential statistics. Descriptive statistics involved the use of frequency tables, pie charts, graphs and percentages while inferential statistics involved the use of correlation analysis. The study established that among the factors that lending procedures, collateral requirement, credit bureau referencing policies and training offered by finance Institutions significantly influence access to credit facility by SME from financial institutions. The key recommendation was that information symmetry should be enhanced between CRBs and financial institutions on one hand and SMEs on the other hand.