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The use of interest rate capping as a way of controlling various economic sectors has highly contributed to a continuous decline in the growth of credit to the small and medium businesses and private entities by introducing a distortion in the market which the credit markets have not been able to recover from. This has resulted to the issues of reduced income, high borrowing risks and a high emerging rate of shylocks who are also perceived to have high interest rates. Based on the provided evidence the caps on loan have highly discouraged most of the SMEs from seeking for growth funds. Empirical studies done have found mixed results on the impacts of interest capping on the SMEs performance thus a research gap. The research aimed at filling the current gap by focusing on a research on establishing the impacts of interest rates capping on the performance of small and medium restaurants in Kenya, within Nairobi County. The research was guided by objectives which include; determining the effect of the interest rate capping on the enterprises’ performance, determining the impact of credit accessibility of the enterprise’s performance, assessing the effect of credit availability on the enterprise’s performance. The research was anchored on liquidity and classical models as well as on the theory of credit market. The research will adopt a descriptive research design. The study population was 312 employees. A census was adopted. The study used both primary and secondary data. Primary data was collected using semi-structured questionnaires while secondary data was obtained from the financial statements of the enterprises. The research further employed questionnaires that were administered to each participant. The study used both the quantitative and qualitative methods of collecting data. The collected data was analyzed using descriptive and inferential statistics like frequency, mean, percentages and standard deviations and be presented using charts, tables and graphs. The study also conducted a multiple regression analysis to establish the relationship between the study variables .The understandings will ensure that they are not charged excessive interest rates for their loans. The study concluded that interest rate capping generally had a positive relationship with the performance of small and medium sized restaurants in Nairobi West. The study concluded that credit accessibility among the small and medium restaurants was based on firm characteristics and capacity and enhanced adjustment to adverse environmental shocks, raised amount of product investment and eliminates financial constraints to a great extent. It was concluded that the education level and experience of the respondents, awareness level, firm size and availability of collateral. The study concluded further that the risks associated with repaying, operating environment, status and ownership structure influenced performance of the SMEs since it determined their potential to get credit from the banks and other lenders. The study recommended that the banks and other lenders in the financial sector should enhance timely access to credit at affordable and flexible rates to enhance firm performance. It was further recommended that the SMEs need to improve awareness on existence of credit, willingness of MFIs and banks to offer credit to enhance SME thriving.  The study recommended that the number of lenders available in the market, willing to extent credit and creating awareness of products need to increase to spread choice, reduce rate and improve access and availability of credit to SMEs.

Interest Rates Capping and Performance of Selected Small and Medium Restaurants in Nairobi West, Nairobi City County, Kenya