MSME loans surge 30% to KSh424.7bn as Equity leads banks

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Kenyan banks gave out KSh 424.67 billion in new MSME loans between January and September 2026, a 30% rise on the KSh 326.5 billion lent in 2025, according to data released by the Kenya Bankers Association (KBA). Equity Bank alone lent KSh 127.95 billion to micro, small and medium enterprises, about 30% of the total.

KBA said the figure puts the industry within reach of its KSh 500 billion target for new MSME loans in 2026 and “on course to record its highest annual lending to small businesses”.

Top 10 banks for MSME loans in 2026

KBA published the ten biggest lenders to small businesses as at September 2026:

Together the ten banks lent KSh 387.6 billion, or about 91% of the industry total. The rest of the sector shared about KSh 37.1 billion.

Equity lent more than twice as much as second-placed Co-op Bank. Kingdom Bank, ninth on the list, is a subsidiary of Co-operative Bank of Kenya, so the Co-op group’s combined MSME lending came to KSh 76.16 billion. Co-op Bank’s latest earnings are covered in our Co-op Bank Q3 profit report.

Can banks hit the KSh500bn MSME target?

To reach KSh 500 billion, banks need to lend about KSh 75.3 billion more in the last three months of 2026, roughly KSh 25.1 billion a month. Lending in the first nine months averaged about KSh 47.2 billion a month, so the target is well within reach if that pace holds.

Part of the push is funded from outside. Equity recently secured a long-term facility for small-business credit, reported in our story on the Equity Bank AfDB SME loan.

Cheaper loans and fewer defaults

KBA linked the rise in MSME loans to lower borrowing costs. Average commercial bank lending rates fell to 14.4% in September 2026, from 17.2% in November 2024. Growth in lending to the private sector picked up to 10.6% in September, from 10.3% in August.

Repayments are also improving. The gross non-performing loan ratio, the share of loans not being repaid on time, fell to 13.9% in September 2026, from 14.8% in June and 17.6% in August 2025.

Borrowers comparing offers can see how the new benchmark works in our KESONIA loan rate explainer. The next rate decision is due at the December 2026 MPC meeting.

What KBA says comes next

KBA said the next priority is reaching more businesses, including first-time bank borrowers and firms that have struggled to get credit, and offering more long-term loans for equipment and expansion.

“Progress will not only be measured by how much money banks lend, but also by how many businesses can access financing and how effectively they use it to grow, create jobs and contribute to the economy,” the association said.

KBA did not publish the number of MSME borrowers, average loan sizes or interest rates by bank. For a wider view of small-business credit, see our report on digital lenders’ KSh153.8bn loan book.

Frequently asked questions

How much did Kenyan banks lend to MSMEs in 2026?

Banks lent KSh 424.67 billion in new MSME loans between January and September 2026, according to the Kenya Bankers Association, a 30% rise on the KSh 326.5 billion lent in 2025.

Which bank gives the most MSME loans in Kenya?

Equity Bank, with KSh 127.95 billion in new MSME loans in the first nine months of 2026, about 30% of the industry total. Co-operative Bank was second with KSh 60.26 billion and KCB third with KSh 41.10 billion.

What is the banks’ MSME lending target for 2026?

The banking industry is targeting KSh 500 billion in new MSME loans in 2026. It needs about KSh 75.3 billion more in October to December to hit it.

Are bank lending rates in Kenya falling?

Yes. KBA said average commercial bank lending rates fell to 14.4% in September 2026, from 17.2% in November 2024.