A Dissertation is submitted to Mzumbe University Dar es Salaam Campus Collage as partial fulfilment of the requirements of the Award of the Master Degree in Business Administration (MBA-CM)The objective ofthis study was to identify the factors responsible for SMEs failure to accessing credit from financial institutions in Tanzania a case study of Urban West Region Zanzibar. This study used the exploratory approach to discussthe a problem based on the previous and current understanding of the issue. The study collected data through questionnaire, interview and documentary review and was analyzed quantitatively and qualitatively. Sample size was 100and probability and non probability was applied.findings in this study reveal that there are some factors that indicate SMEs are the source of failure in their business though in most cases the failures were caused by Financial Institutions and Governmentlarge. Thus, the studyrecommended that the Government should support programmes that offer affordable training in entrepreneurship which is an essential component towards the expansion of their businesses activities. Also Financial Institutionsthatoperatein SMEs should lower their interest rate on loan and set a suitable timeframe that entrepreneurs will pay. Ina adition to that, SMEs should undergo training on entrepreneurship and should prepare business plan before starting the business and present credentials that meet Financial Institutions requirement in order to accessing funds for their business. This study suggests study are that the Tanzanian SMES policy to be reviewed and updated in order to be usefully to SMEs according to time due to the existing policies do not support SMEs credit policies, the Government has to create conducive Micro economic environment which will allowSMEs to expand and develop