Micro and Small Enterprises Challenges in Managing Loan at Mbeya, Tanzania

Abstract

The study investigates challenges faced by Micro and Small Enterprises (MSEs) in managing loan in Mbeya. The study adopted a cross section survey of 80 MSEs in Mbeya. Data was collected using closed ended questionnaire, summarized using frequency distribution tables and analysed using descriptive statistics. Result reveals that corruption during licence registration, loan interest rates and lack of financial management skills are among of the top challenges to MSEs in managing their loans. Loan tax rates and loan divergence were also associated too. To redress the situation training on the aspect of loan and financial management is highly recommended. However, government has to simplify business license registration procedure and review MSEs loan tax regularly as well as interest rates and loan service charges to provide MSEs tax relief by reducing the percentage of tax, interest rates and loan service charges imposed to traders, corruption and alternatively tax exemption.