Influence of Collateral on Microfinance Credit Rationing among Registered Smes in Kakamega County, Kenya

Purpose: To establish the influence of collateral on microfinance rationing of credit among registered SMEs in Kakamega County, Kenya Methodology/Approach: This study used causal and descriptive designs. The study adopted primary data where questionnaires were used to collect data. Regression analysis as well as descriptive methods were applied. Data was presented using tables. Findings: Collateral and credit rationing relationship(R=0.693, P=0.000). This implies that collateral had a significant effect on credit rationing. This led to rejection of hypotheses H01 Implications: The study proposed that management of SMEs in Kakamega County should establish a credit policy manual to facilitate the recovery of debts, irrespective of the size of the organization. SMEs in Kakamega County management should observe collateral base to strengthen their borrowing power.