Credit crunches represented periods of severe credit market tightening characterized by reduced lending, increased borrowing costs, and stringent credit requirements. Uganda experienced significant credit market contractions between 2020 and 2023 following the COVID-19 pandemic, regulatory changes in the banking sector, and macroeconomic instability. Small and Medium Enterprises (SMEs), which depended heavily on external financing for operations and growth, faced particular vulnerability during such periods. Understanding the effect of credit crunches on SME financial performance was critical for developing mitigation strategies and supporting business continuity. This study employed a descriptive cross-sectional survey design using mixed methods. A sample of 156 SMEs was selected from five regions of Uganda using multistage cluster sampling. Data were collected through structured questionnaires administered to business owners/managers and key informant interviews with financial institution officials and industry experts. Quantitative data were analyzed using SPSS version 26, employing descriptive statistics, independent samples t-tests, Pearson correlation, and multiple regression analysis. Qualitative data underwent thematic content analysis to provide contextual understanding. Findings revealed a significant negative relationship between credit crunch severity and SME financial performance (r=-0.768, p