Abstract:
This study examined the effect of Microfinance Services on the performance of SMEs. The study
was guided by the following objectives notably, to assess the relationship between micro loan
services and performance of SMEs; to examine the relationship between micro savings deposits
and performance of SMEs, and to establish the relationship between financial training and
performance of SMEs. The study used a cross sectional research design, and a quantitative
approach. Data was collected from a target population of 100 of SMEs with accessible unit of 70
of SMEs in Tororo Municipality, using simple random and purposive sampling techniques. Data
were collected with the aid of closed ended questionnaire and Statistical Packages for Social
Sciences was employed for analyzing data from which frequency tables, descriptive statistics
(mean and standard deviation), reliability, validity, correlation, and regression results were
obtained. The study findings revealed that there is a positive and a significant effect of micro loan
services and performance of SMEs, micro savings deposits and performance of SMEs and
financial training and performance of SMEs. The study concludes that there is a strong predictive
power that the dimensions of Microfinance Services contribute towards enhancing the
performance of SMEs in Tororo Municipality. Finally, the study, recommends that efforts to
improve the performance of SMEs depends on Microfinance Services (micro loan services, micro
savings deposits and financial training).
