A Dissertation Submitted In Partial Fulfillment of the Requirements for the Award of Degree of Master of Business Administration (MBA - Corporate Management) of Mzumbe University 2013The main objective of the study was to assess the funding arrangements available to SMEs in Ilemela district Mwanza region. Specifically the study assessed the source of funds that exists for the start-up and expansion of SMEs in Ilemela District, outlined the main challenges to credit for start up and expansion of SMEs in Ilemela District, identify sustainable sources of funding start up, expansion and development of SMEs in Ilemela district and Identified ways of improving credit availability, accessibility and delivery to SMEs in Ilemela district. A cross sectional research design was adopted, 80 SMEs from eight villages/streets of Ilemela district were randomly selected. Key informants were randomly selected from commercial bank, focus group discussions were also done in the selected villages. Data were collected in selected villages through administration of questionnaire and checklist. Secondary data was collected from Library books and publications from the internet and the ministry of Industry and Trade, Tanzania Chamber of Commerce and SIDO. Data were analyesd using Statistical Package for Social Science software to obtain frequencies and percentages in order to summarize results. Qualitative data collected through focus group discussion and key informant interview method were analysed using structural function content analysis method. The findings of the study show that the sources of funds for SMEs were mainly Personal savings and contribution of friends and relatives, only a small percent comes from business loans, government support and donors contributions. The study revealed that lack of collateral, bureaucracy of bank officials and long procedures were the major challenges of getting loans to SMEs in Ilemela district. The study identified ways of improving credit delivery to SMEs; these include reduced interest rate, introduce loan guarantee schemes and reduced loan requirements such as collateral. It was recommended that there is a need of improving SMEs access to credits, by encouraging private sector to open up more financial institutions and existing ones to increase its networks, this will increase credit availability to SMEs and makes its delivery sustainable. Financial institutions should revise their lending procedures and reduce loan Interest rate to enable SMEs to break even and repay their loans earlier. Also it is recommended that the government and private sector should establish loan guarantee schemes to increase access to credits to start up and expansion of SMEs in Ilemela district.