Influence of Lending Procedures on Performance of Micro and Small Enterprises Business in Isiolo North Sub-County

Abstract

Globally, MSE business is regarded as a critical economic development pillar. In Kenya, it is estimated that over 80% of employment opportunities are provided by the MSE sector (KNBS, 2019). According to sessional paper no. 10 of 2012, Isiolo County has been identified as a gateway for development of Northern parts of Kenya. Consequently, the county is emerging as a hub for entrepreneurial opportunities and has attracted businesses of all kinds (Muriithi, 2017). Nonetheless, businesses in Isiolo County still face serious challenges that impede their performance. The objective of the study was to establish the influence of lending procedures on performance of MSE’s business in Isiolo North Sub- County. Descriptive sample test architecture was used in this report. This study considered the target population of 120 MSEs. The study found that lending procedures have a statistically significant and positive relationship with performance of MSE’s business in Isiolo North Sub-County. The study concluded that lending procedures had a significant predictive ability to influence performance of MSE’s business. The study recommends the need for financial institutions to improve the lending procedures in order to allow more MSE businesses access to credit. In particular, the financial institutions should make the loan application process simple, review loan repayment period and conduct proper client evaluation.