Abstract:
SMEs' access to financing is important for growth, competitiveness, and sustainability.
However, the effectiveness of different financing techniques varies across firms,
particularly in rural areas where access to formal financial services remains limited.
This study examined the influence of financing techniques and government policy on
SMEs financial performance in Baringo Central Sub-County, Kenya. The study
assessed the effects of traditional bank loans, crowdfunding, fintech solutions,
government programs and development bank initiatives on SME performance. The
study was anchored on Financial Capital Theory, Signalling Theory and Pecking Order
Theory. A descriptive research design was approved, and stratified random sampling
was used to select 317 sample size from a population of 498 owners /managers in key
sectors. Data were collected using structured questionnaires and analysed using both
descriptive statistics (mean, standard deviation, kurtosis and skewness) and inferential
statistics (simple regression and multiple regression analysis). Ethical standards
including informed consent, confidentiality, voluntary participation and ethical
approval, were observed throughout the study. The findings revealed that crowdfunding
and fintech solutions had significant positive effects on SMEs financial performance.
Crowdfunding had a coefficient of β=0.675, p<0.001) and explained 48.5 % of the
variance in performance. Fintech solutions had the strongest effect, the β=0.801,
p<0.001), explaining 63.1 % of performance variance. The study concluded that
traditional bank loans were less preferred by SMEs due to their perceived rigidity and
limited returns. Crowdfunding, fintech solutions, and government programs provide
greater benefits. Fintech solutions emerged as the most influential financing technique.
The study recommends promoting flexible financial products, strengthening digital
infrastructure, increasing SMEs awareness of alternative financing options, and
developing supportive government policies. These measures improves access to
finance, enhance SME financial performance, and promote sustainable growth in
Baringo Central Sub-County.
