The Effects of Microfinance Loans on Performance of Small and Medium Enterprises (SMEs) in Tanzania : A Case of NMB Borrowers in Kinondoni, Dar es salaam

The study assessed the effects of Microfinance loans on performance of Small and Medium Enterprises (SMEs) in Tanzania. A cross sectional design applying descriptive research design was adopted. The sample of 106 respondents who are clients of National Microfinance Bank were selected by using simple random sampling. Questionnaires constructed from five likert scale were used for gathering information pertaining to effects of loan received from NMB. Data were coded in SPSS and thereafter analyzed to generate descriptive and inferential statistics. Results from the study indicate that there was a significant increase in the average monthly gross profit of SMEs after employing loan obtained from NMB over time. Results found no significant relationship between collateral with SME performance in terms of socioeconomic performance. Additionally, results showed strong relationship between Loan size with SME performance and slightly significant relationship between loan processing time with SME performance. Furthermore there was no relationship found between collateral and SME performance. The study recommends that microfinance institutions should account for the social and economic impact their programs have on their clients. For the case of Micro-loan users, they should be able to utilize their loan facilities to the targeted goal so as to achieve the organizational goal