Financing Techniques, Government Policy And Financial Performance Of Small And Medium Enterprises In Baringo Central Sub- County, Kenya

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.