Collateral Requirements and The Performance of Micro Liquefied Petroleum Gas Retailers in Nyeri County, Kenya

This study set out to examine the effect of collateral requirements on the performance of micro–Liquefied Petroleum Gas (LPG) retailers in Nyeri County, Kenya. Although micro and small enterprises are key drivers of Kenya’s economy, their growth is often constrained by stringent credit conditions. Financial institutions continue to emphasize immovable assets such as land titles as collateral, which many small retailers do not possess. This exclusion denies them affordable credit, restricting their ability to finance stock, meet safety regulations, and expand operations—factors essential for supporting Kenya’s transition to clean energy. Adopting a descriptive cross-sectional design, the research targeted 209 registered micro LPG retailers in the county, with 138 respondents selected through Yamane’s formula and random sampling. Data were collected using structured questionnaires and analyzed through both descriptive and inferential statistics, including bivariate regression. Reliability was confirmed using Cronbach’s alpha, and ethical principles such as informed consent and confidentiality were observed. The findings revealed that collateral requirements were widely viewed as restrictive, excessive, and unclear, with a mean rating of 4.09. Regression analysis showed that collateral accounted for 50.7% of the variation in business performance (R² = 0.507). The positive coefficient (β = 1.044, p < 0.05) indicated that when collateral frameworks were more flexible, retailers’ performance improved significantly. This demonstrates that easing collateral obligations through alternatives such as movable assets creates pathways for small enterprises to access credit and strengthen their operations. The study concludes that collateral requirements significantly influence access to finance and performance of micro LPG retailers, where flexible frameworks foster growth. It recommends inclusive collateral models and stronger enforcement of the Movable Property Security Rights Act (2017). Keywords: Collateral requirements, credit access, micro LPG retailers, enterprise performance, movable assets, Nyeri County, Kenya.