Financing Options and Financial Growth of Small and Medium Enterprises inKirinyaga County, Kenya
| dc.contributor.author | Kinyua, Michael Mithamo | |
| dc.contributor.author | Mungai, John | |
| dc.date.accessioned | 2026-02-02T08:12:01Z | |
| dc.date.available | 2026-02-02T08:12:01Z | |
| dc.date.issued | 2026-01 | |
| dc.description | Research Article | |
| dc.description.abstract | Small and Medium Enterprises (SMEs) are crucial to Kenya's economy, serving as its foundation and supporting numerous families. However, accessing financing remains a persistent challenge for these enterprises. While extensive research examines factors affecting SME performance and profitability in Kenya, few studies have explored constraints SMEs encounter in securing financing from various sources and how these challenges relate to overall performance. Most studies focus on industry or macroeconomic factors rather than financing options. This study investigated the effect of financing options on the financial growth of SMEs in Kirinyaga County, Kenya. Specific objectives assessed the effects of equity financing, debt financing, and informal financing on SME financial growth. The study's significance lies in its potential to inform SME owners and policymakers about effective financing strategies that enhance financial growth, ultimately contributing to sustainable SME development in Kirinyaga County and fostering a more robust regional economic environment. Theoretical frameworks including Pecking Order Theory, Trade-Off Theory, and Agency Theory guided the analysis, providing comprehensive understanding of how different financing options affect SMEs. The study employed a descriptive research design involving 139 SMEs selected through Yamane sampling strategy from 213 registered SMEs as of December 2023. A pilot test refined the questionnaire, ensuring clarity and relevance. Data collection utilized structured questionnaires, prioritizing ethical considerations including confidentiality and voluntary participation. Operationalization and measurement of variables defined key constructs related to financing options. Diagnostic tests assessed data quality. Data presentation included descriptive statistics (means and standard deviations) and inferential statistics to establish variable relationships, analyzed using SPSS version 23. Equity, debt, and informal financing demonstrated positive significant effects on SME financial growth in Kirinyaga County. The study concludes that equity financing provides essential capital for expanding operations, investing in new technologies, and increasing market reach. Debt financing enables businesses to invest in expansion, improve operations, and enhance market competitiveness. Informal financing provides crucial capital to SMEs struggling to access traditional bank loans due to stringent requirements. The study recommends that the County develop targeted financial literacy programs educating SME owners about equity financing options and effectively presenting business cases to potential investors. The government should create platforms for SMEs to showcase business plans and financial needs to potential investors and lenders, facilitating connections that could lead to better financing opportunities | |
| dc.identifier.citation | Kinyua, M. M., & Mungai, J. (2026). Financing Options and Financial Growth of Small and Medium Enterprises inKirinyaga County, Kenya.Journal of Finance and Accounting, 10 (1), 70-89 | |
| dc.identifier.issn | 2616-4965 | |
| dc.identifier.uri | https://ir-library.ku.ac.ke/handle/123456789/32226 | |
| dc.language.iso | en | |
| dc.publisher | Stratford Peer Reviewed Journals and Book Publishing | |
| dc.title | Financing Options and Financial Growth of Small and Medium Enterprises inKirinyaga County, Kenya | |
| dc.type | Article |