A Dissertation Submitted in Partial Fulfillment of the Requirements for the Award of the Degree of Master of Business Administration in Corporate Management (MBA-CM) of Mzumbe University.The purpose of this study was to examine the determinants of loan default among SMEs in Dar es Salaam. The study fits into the quest to find a more objective and efficient way of accessing the default risk associated with SME lending in order to reduce the rate of non-performing loans in the financial institutions. Researcher examined a sample of 100 respondents drawn from the population of 200 staff and the microenterprises in Dar es Salaam. The study used both secondary data from other sources and primary data collected using questionnaires to carry out the study. The descriptive statistical tools helped the researcher to describe the data and determine the extent used. Analysis was done quantitatively and qualitatively by use of descriptive statistics. This included bar graphs, tables, percentages, pie charts etc. The study found that type of business, managerial skills, credit disbursement, interest rate policy, exchange rate policy, supervision, monitoring and follow up contributes to loan default among SMEs financed by commercial banks to great extent. The study further revealed that the loan default rate for all the banks in the sample was in the range of 60 and 81 per cent, giving an average of 70.5 percent. The study also found that possible reasons for the low delinquency rates among the SMEs include: improved borrowers’ knowledge, commitment to business; counselling and monitoring activities of banks. As observed by Baku and Smith (1998), lenders’ actions in preventing default include the underwriting process prior to making a loan, counselling and follow-up after a loan is made, collection practices should a borrower fail to make payments, and forbearance or movement to default and foreclosure. The study concluded that, the government should collate and analyze information on SMEs, so that an informed decision could always be made on the full understanding of the problems of the sector