Small and Micro Enterprises (SMEs) in developing countries and Kenya in particular face numerous challenges in their path to growth and expansion. Despite the many startups and government effort to improve the regulatory and institutional framework in Kenya, most SMEs do not evolve into medium enterprises. This paper sought to determine influence of access to finance and government policies on the growth SMEs in Kenya. The research design employed in this study was the descriptive cross sectional design that used a purposive survey. The study targeted SMEs situated in Nairobi City and operating in four sub-sectors of the economy namely: transportation and storage; accommodation and services activities; information and communication; financial and insurance activities; and professional, scientific and technical activities. A total of 395 SMEs were sampled using stratified technique and response rate registered was 88.1%. Primary data were collected through questionnaires administered on owners and managers of SMEs by the researcher by way of structured interviews. Data analysis procedures were carried out and the data coded before running the initial summaries in Statistical Package for Social Sciences (SPSS). Chi-square test of association at a 5% level of significance was used to explore the relationship between variables. The study found out that, access to finance is a critical factor in the establishment, development and growth of the SME sector. The financial system although relatively developed in Kenya is still skewed towards the established businesses. Despite the focus on policy on development of SMEs, it was found out that, government policies had the least influenced on the growth of SMEs. Consequently, there is need for review of the banking capital requirement rules to allow more banks to operate in the market. There should be use of the established mobile money technology platforms to allow individuals to directly purchase treasury bills for transparency in the financial market. This will have a positive impact on the interest spread and allow cheaper credits to private sector especially the SME sector. There is need for specialized financial institutions funded by government and development partners that will house all the government special funds destined for the SME sector.
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