Effect of Entrepreneurial Finance on the Growth of Small and Medium Enterprises in Kenya

Abstract

SMEs account for over 95 % of the business population, and are therefore an increasingly dominant form of business organisation in all countries. Access to finance is a key determinant for business start-up, development and growth for Small and Medium-Enterprises. The objective of this paper was to assess the effect of access to entrepreneurial finance on the growth of Small and Medium Enterprises in Kenya. A sample of 142 SMEs was used for the study to represent the entire population. Out of the 142, there were 132 respondents which is 92.96%. Primary data was collected using interview guides, structured and Semi structured questionnaires which were administered to the owners and managers of SMEs. Data was analyzed using Statistical Package for Social Sciences (SPSS) version 20.  The study found out that access to entrepreneurial finance has a positive influence on the growth of SMEs. The study recommends that the government should support the legal and regulatory framework that strengthens the financial infrastructure at the same time build capacity of the financial institutions to enhance SMEs access to finances.

Key words: Entrepreneurship, Growth, Profitability, Missing middle, entrepreneurial finance, access to finance, Medium enterprises, Small enterprises