Kenyan SMEs that have since been locked out of funding by commercial banks are set to benefit from Sh17 billion from the African Guarantee Fund.
The money will insure half of the loans SMEs borrow from banks and encourage banks to lend to small businesses.
NIC and Ecobank are part of the banks that have entered agreements with AGF.
SMEs have been starved of credit making central bank to compel banks to lend to small businesses through Stawi loan product.
This comes even as the world marks the world SMEs day on Thursday.
Most SMEs in Kenya instead access the funds from cooperative societies.
The Consumer Federation of Kenya Thursday hit out at the Parliament for failing to ensure that SMEs get credit.
Since the introduction of interest rate caps, banks put a freeze on SME lending while making it difficult for individuals to borrow.
Small businesses account for more than 80 percent of all the jobs in the country.