Abstract:
he study focused on assessing challenges facing the Informal businesses in accessing credits
from MFIs Using Food and Fruit vendors at MoCU as the case study. The selected area was
Moshi Cooperative University (MoCU) at Moshi Municipality in Kilimanjaro region. The research
specific objectives were to examine criteria of Microfinance Institutions to issue loans to the
Informal business sector, to find out why most of Informal Business sector fail to prepare good
Business Plan, to determine factors affecting informal business sector in preparing proper
accounting records, to understand the reasons as to why MFIs cannot reach the Informal
business sectors while most of them they are in group of low-income people. The study used data
collection methods such as Questionnaires and Focus group discussion, snowball sampling was
used to determine the sample size, where by 50 respondents were involved in the study, both
primary and secondary data were used in this study, data were analyzed by the use of statistical
package for social science (SPSS) and excel, and were presented through figures and tables. The
study findings reveal several challenges faced by Informal businesses on accessing credits from
MFIs, lack of collateral, lack of savings, lack of entrepreneurship education, lack of physical
address, lack of trustiness. The study recommended the Microfinance Institutions should provide
training and education about entrepreneurship to their clients, reduce the terms and conditions,
and find other alternatives of lending money to entrepreneurs than depend much on collateral. It
also recommended Government should provide conducive environment to Small and Medium
Enterprises operating informally on accessing a loan from Microfinance Institutions by advising
MFIs to reduce restrictions on accessing loan to entrepreneurs, and entrepreneurs should make
sure that they have permanent business address for easier access a loan and monitored.
