This thesis examines the role of financial institutions, banks and microfinance institutions,rnin the growth of small and medium enterprises (SMEs). The study focuses on examining therncontribution of financial institutions, assessing the accessibility and affordability ofrnproducts and services, and identifying ways of addressing the problems in accessing andrnsettling loans.rnThe study adopts a mixed research approach to test the hypothesis and answer researchrnquestions. Specifically, the study uses survey of SMEs, documentary analysis (documentsrnheld by SMEs), and in-depth interviews with banks managers/officials. The studyrnstatistically analyses the results of survey and documentary analysis while descriptivernresearch approach was employed for in-depth interviews.rnResults show that financial institutions were contributing to SMEs growth. Consequently,rnthe relationship between loans from financial institutions and SMEs growth are positivernand statistically significant. However, the extents of contribution were very low. Further, itrnidentifies ways of addressing the problems that SMEs face in accessing and settling loansrninclude: flexing terms and conditions, using alternative collateral and credit facilities,rnrefinancing, and postponing maturity period. Finally, the thesis recommends a serious ofrnmeasures which should be performed by the government and by financial institutions.rnThese include: creation of a level playing field, lowering transactional costs, andrncommercial banks should reappraise their role.rnKey words: role, financial institutions, SMEs growth