Kenya’s commercial banking sector has accelerated its credit support for micro, small, and medium enterprises (MSMEs), disbursing KSh424.67 billion in fresh credit during the first nine months of 2026.
According to industry data released by the Kenya Bankers Association (KBA), this represents a 30 percent expansion compared to the KSh326.5 billion lent over the same period in 2025.
This sustained financing momentum places the banking sector within striking distance of its KSh500 billion full-year target, setting the stage for the country to register its highest-ever annual lending volume to small businesses.
While the broader banking fraternity recorded impressive growth, Equity Bank emerged as the champion of small enterprise financing. Equity Bank disbursed loans worth KSh127.95 billion to entrepreneurs by end of September 2026. The listed lender single-handedly accounted for over 30 percent of all new MSME credit issued across the entire industry.
The bank’s disbursements were more than double those of its closest peer, Co-operative Bank, and more than three times the volume recorded by third-placed KCB. In fact, Equity provided more capital to small enterprises on its own than the second- and third-ranked lenders combined.
Top 10 banks driving MSME financing as at September 2026
| Rank | Financial Institution | New MSME Lending (KES) | Approximate Industry Share |
| 1 | Equity Bank | 127.95 Billion | 30.13% |
| 2 | Co-operative Bank | 60.26 Billion | 14.19% |
| 3 | KCB Bank | 41.10 Billion | 9.68% |
| 4 | Family Bank | 31.84 Billion | 7.50% |
| 5 | NCBA | 28.69 Billion | 6.76% |
| 6 | Stanbic Bank | 25.93 Billion | 6.11% |
| 7 | Absa Bank Kenya | 21.20 Billion | 4.99% |
| 8 | I&M Bank | 20.39 Billion | 4.80% |
| 9 | Kingdom Bank | 15.90 Billion | 3.74% |
| 10 | Diamond Trust Bank (DTB) | 14.34 Billion | 3.38% |
(Source: Kenya Bankers Association)
This surge in enterprise financing has been reinforced by an improving macroeconomic climate characterized by softening borrowing costs and revitalized private enterprise demand.
Average commercial bank lending rates moderated to 14.4 percent in September 2026, marking a meaningful easing from the 17.2 percent recorded in November 2024. Cheaper credit has fostered renewed business confidence, lifting overall private sector credit expansion to 10.6 percent in September from 10.3 percent in August.
At the same time, the health of commercial loan books has markedly strengthened. The Kenya Bankers Association reported steady improvements in debt servicing, with the gross non-performing loan ratio contracting to 13.9 percent in September 2026, down from 14.8 percent in June 2026 and 17.6 percent in August 2025.
This consistent decline in default rates reflects sound credit risk appraisal across the industry, coupled with healthier cash flows among operating businesses as supply chain bottlenecks and inflationary pressures subside.
