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The main objective of the study was to assess the Contribution of commercial banks financial services to SMEs performance in Biharamuro district in Tanzania. The specific objectives of the study were to identify the financial services offered by NMB, to identify the barriers that commercial banks (NMB Bank Plc) encounter in financing of SMEs and to examine the benefits enjoyed by SMEs. The study population was 450 including SME owners and bank staffs and sample size of 82 were selected. Researcher applied simple random sampling, and purposeful sampling method as sampling techniques to ensure that accurate sample were obtained for the study. Primary data were collected by the use of interviews, questionnaires and observation which were designed and administered to SME customers and employees of the NMB Bank. The data were analyzed using tabulation and excel The researcher found that commercial banks improves through Increased access to finance will foster efficient growth in the SME sector, improving business conditions, Helping SMEs meet the requirements of formal financing, making the financial system more accessible to SMEs and expanding the supply of finance through the non-financial private sector. The researcher found that barriers encountered by financial institutions in financing SMEs include; SMEs lack collateral, Banks require SME transparency, Lack of effective channels and modalities for communication, Banks consider SM E lending high risk and Banks incur higher administrative costs by lending to SMEs. In view of the findings, it was recommended that banks should create a separate department for the SMEs; the establishment of a common fund by the government for SMEs; there should be a national policy on SMEs by the government in respect of funding among others and educate SMEs in the efficient and effective financial management of their businesses in order to sustain the SMEs to grow into much bigger industries in the near future. |
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