Roles of bank credit and its impact on SME’s: a case of Kisumu county

Most of the SMEs lack access to finance for starting, operating and expanding their businesses. According to national baseline survey (1999), 36.2 % of the Small and Medium sized Enterprises (SMEs) in Kenya, reported that their business closed down due to shortage of working capital. Despite the fact that the SMEs had operated for some years, about 94.2% of the respondents still found it difficult to obtain bank funds to finance business development. Only about 5.8% have successfully received this funding. The survey therefore suggested the existence of a gap between the demand for bank credit by SMEs and the supply of funds by banks. This huge gap triggered the need to determine the financial constraints faced by the Small and Medium sized Enterprises and the actions taken to overcome the financing constraints. This book therefore provides the financial constraints faced by the Small and Medium sized Enterprises, the actions that can be taken by the SMEs, Government, Commercial banks and the non-governmental organisations to overcome the financing constraints