Are PE and mezzanine financing answer to SMEs funding hurdle?

The lack of access to finance is one of the most prevalent challenges entrepreneurs and business owners face. Due to the interest rate regulation, Kenyan banks are now much more selective, preferring to focus their efforts and credit on larger corporates which have good borrowing standing and the advantage to offer collaterals.

In September 2016, the banking sector in Kenya started to operationalise the Banking (Amendment) Act 2015. This law sought to set the maximum lending rate at no more than four percent above the Central Bank rate. With this regulation, banks became more risk averse towards borrowers since they could not charge higher rates to compensate them for the additional risk they were taking.