Factors affecting loan accessibility to small and medium enterprises: Evidence from Tanzania

The study examined factors affecting loan accessibility to Small and Medium Enterprises(SMEs) from formal credit institutions basing on demand. Specifically the study examined terms and conditions of acquiring loan from institutions. Both primary and secondary data were collected. Primary data were collected from 60 respondents through interview, questionnaire from official member of credit institutions and individuals from small and medium enterprises. Secondary data were collected through documentary reviews.The findings revealed that Financial Institutions offer loans with stiff conditions and most of applicants fail to meet those conditions including interest rates, collateral, loan procedures, business plan, business registration and repayment schedule. However, others who are engaged in retail shop and carpentry are managing to meet loan requirement. It is therefore recommended that government and Non Government Organizations should set up policy option which will favour entrepreneur by regulating conditions for loan accessibility to enable growth of their business.