Small and medium enterprises globally have donated to macroeconomic visions of nations and their development is important for markets that are competitive and competence, absorption of labor and produce. Some elements are supposed to be connected through working efficiencies and other segments interventions like formation of an enabling lawful and approach framework, facilitation of access to markets, investments of capital, offering trainings, development of infrastructure, building capacity, taxation and adaptations of technology in order to meet overall business objectives. The main objective of the study was to determine the effect of microfinance services on the financial performance of Small and medium enterprises in Kitui County. The specific objectives of the study were: to establish the effect of credit facilities on financial performance of SMES in Kitui County, Kenya, to determine the effects of saving culture on financial performance of SMES in Kitui County, Kenya and to determine the effects of financial literacy on financial performance of SMES in Kitui County, Kenya. The study used three theories namely; microfinance theory, games theory and poverty reduction theory. These theories try to explain whether microfinance has helped people in mostly providing jobs through the SMEs sector. This study will employ the use of descriptive design. This research employed the use of questionnaires as the method of getting information from the respondents that have been selected. The completed questionnaires were reviewed and edited for accuracy, competence and completeness. The response was coded and entries made into Statistical Package for Social Science (SPSS version 23).The inferential statistic was used to show the nature and magnitude of connections that was built between the independent, intervening and dependent variable using regression analysis.