African Journal of
Business Management

  • Abbreviation: Afr. J. Bus. Manage.
  • Language: English
  • ISSN: 1993-8233
  • DOI: 10.5897/AJBM
  • Start Year: 2007
  • Published Articles: 4171

Full Length Research Paper

Challenges small and medium enterprises (SMEs) face in acquiring loans from commercial banks in Tanzania

Nassoro Gassiah
  • Nassoro Gassiah
  • Department of Business Studies, Faculty of Commerce, Jordan University College, P. O. Box 1878 Morogoro, Tanzania.
  • Google Scholar
Jaraj Kikula
  • Jaraj Kikula
  • Department of Business Studies, Faculty of Social Science, Mzumbe University, Tanzania.
  • Google Scholar

  •  Received: 11 August 2021
  •  Accepted: 27 September 2021
  •  Published: 30 April 2022


Commercial banks in developing economies play an important role in promoting the growth of SMEs through the loan provided since they create conducive environment for their growth and success. The study focuses on investigating the challenges SMEs face in acquiring loans from commercial banks. The study used 120 respondents who were purposively and randomly selected. Both primary and secondary data were used. Data were analyzed descriptively and presented in tables, percentages, pie charts and tabulation to show differences in frequencies. Statistical Package for Social Sciences (SPSS) version 20.0 was used in coding, entering and analyzing the data. The study found that high interest rates, lack of collateral, short repayment period, lack of loan information, lack of integrity of bank officers and lack of innovations were the major challenges/difficulties which SMEs face in accessing credit facilities from commercial banks in Morogoro municipality. The study findings generally revealed that SMEs are facing challenges in accessing credit facilities in Morogoro Municipality; hence the researchers, based on the study findings, conclude that SMEs in Tanzania are small because they prefer to get their start-up capital from personal savings, relatives and friends. Based on the study findings, researchers recommended that for banks to attract customers (SMEs) to borrow, they should reduce the interest rates charges. Also, commercial banks should adjust repayment period which would be flexible enough within the business operational cycle of different SMEs in the study area.


Key words: Small and medium enterprises, credit facilities, commercial bank.