Challenges facing small and medium enterprises in accessing credits: the case of Mbeya city.

SMEs sector is one of among the crucial sectors that are engine in the national economic development if used strategically. It can ensure long-term employment creation and contributes to the government revenue through taxes. However, the sector has been passing through challenges in obtaining credits from financial institutions for a very long time. The situation has been explained by numerous limiting factors. By looking on the challenges, this study aimed at testing the influence of low capital, absence of track records and high interest rates as among the limitating factors in accessing credit in Tanzania. The study employed explanatory research design that used quantitative method; and a structured questionnaire was employed in data collection from a random sample of 99 SMEs managers that filled out and returned the questionnaires.The study also used Regressions Analysis for estimating relationship among variables and the results indicate that, the problem of access to credit among SMEs in Tanzania is highly related by low capital, absence of track records and presence of high interest rates. Moreover, the correlation analysis reveals that the highest correlation is between absence of vivid track records and high interest rates. This implies that SMEs in Tanzania are highly challenged by these two limiting factors. The results therefore imply that for SMEs to access credit for their growth and development are highly influenced by level of capital of which the enterprise possesses presence of track records and interest rates charged by lending institutions.