In this study the attempt is made to find the impact of Microfinance banks on the development of Small and Medium Enterprises (SMEs) with specific reference to Damaturu the capital of Yobe State of Nigeria. The main objective of the study was to assess the development of small and medium scale enterprises gearing the whole attention to the contribution of microfinance banks and to evaluate the aftermath of the strict borrowing condition of microfinance banks on the development of the small and medium scale enterprises. For this purpose, the study used representative random sampling and administered fifty (50) questionnaires out of which forty-one (41) were correctly filled and returned. For the analysis of data, the research used Chi-square tool to test the formulated hypotheses. After the careful analysis of data, the findings revealed that the bank is in good position to enhance the development of SMEs in the study area even though little entrepreneurs patronize due to the interest rate attached to the fund. The findings also revealed that the strict borrowing condition in place ordained by the bank is also a militating factor that prevent entrepreneurs from patronizing the service of the bank. The study recommended that government should intervene in the contemporary issues and lay hands in bestowing relief to those banks and in encouraging them in many ways, such like tax holidays and it’s like to keep this sub-industry of small and medium scale enterprises alive for the good of all.
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