Effects Of Micro-Finance Services On The Performance Of Small And Medium Enterprises Performance In Nakuru Town

The purpose of this study was to investigate the effects of micro-finance funding on the performance of small and medium enterprises within Nakuru town. More specifically, the study sought to analyze the effect of MFI’s cost of credit on the performance of SMEs, to determine the effect of non-repayment of MFI’s loans on the performance of SMEs and to evaluate the effect of trainings offered by MFIs on SMEs’ performance in Nakuru town. The population of the study was 84 SME’s owners and the researcher employed a census sampling method. To achieve the objectives of the study, a survey design was employed. The consistency of the study results were measured using test- retest reliability whereby the same group of respondents will be used repeatedly to test whether the same results could be obtained. The content validity will be ascertained by the researcher in consultation with the supervisors and expert opinion from them. The study relied principally on primary data which was collected using questionnaires containing mainly closed ended questions for ease of analysis. The study employed an exploratory survey study design which sought to collect data without manipulating the research descriptive study variables or the respondents in an attempt to get the perception of the respondents on the effects of micro-finance funding on the performance of small and medium enterprises. This study targeted SME’s shops funded by MFIs within Nakuru town and used a census sampling method because the target population was small.Data was analyzed using descriptive and inferential statistics with the aid of Statistical Package for the Social Sciences (SPSS). Findings indicated that r 2 = 0.638, which means that 63% of the total variation in dependent variable can be explained by the linear relationship between x and y. Correlation analysis results revealed cost of credit(r=0.670, α = 0.01), non-payment (r = 0.590 α = 0.01) and training (r = 0.621 α =0.01) had an influence on increase in performance with a positive and significant relationship. It can therefore be concluded that all the variables were significant to the study problem although the degrees of influence varied. Based on the findings, the study concludes that the performance is due to changes in cost of credit, on-repayment of loans and training provided by MFIs. The results show the relationship between the micro finance services and the growth of SMEs. There is a strong positive relationship between the micro finance services and the SMEs Growth. The study further concludes that Microcredit and Training provided to SMEs leads to their high growth. Since the study focused on micro finance services on the performance of SMEs in Nakuru County, it is suggested that further studies be done on other Counties. This is because different counties have unique characteristics and diverse contextual realities that might affect micro finance services offered to SMEs. This study will be of benefit to the small and medium enterprises because they will be able to use the results of this study to overcome the challenges that might be preventing them from stabilizing their businesses. Since the study focused on micro finance services on the performance of SMEs in Nakuru County, it is suggested that further studies be done on other Counties. This is because different counties have unique characteristics and diverse contextual realities that might affect micro finance services offered to SMEs