The study was conducted in two market [Owns, namely, Debre Birhan and Assela with thernaim of identify ing the impact of microcredit on micro enterprise income.rnAccording to the findings of the study, borrowers in Debre Birhan were able to increasernmonthly enterprise income from 181.14 Birr per month before the loan to 252. 77 Birr perrnmonth after the loan. Non- borrowers reported current monthly enterprise income of Birrrn154. 77. Borrowers in Assela indicated an increase in enterprise income from Birr 139.32rnp er month before the loan to Birr230 per month after the loan. The current enterprisernincome of the non- borrowers was Birr 282.94 per month.rnThe regression result showed that income is affected by several factors . Among the manyrnfactors, credit was significantly correlated to average microenterprise income in DebrernBirhan. Credit was not significantly correlated with income in the case of Assela. Enterprisernincome was also affected by start-up capital, non-paid family workers, paid employees andrnproductive assets in Debre Birhan. The other variable which correlated to income was therntype of economic activity. Those who were engaged in service enterprises earned morernincome than manufacturing in both towns.rnAs indicated credit was not Significantly correlated with income in the case of Assela. Thernpossible reasons for this result were: - a) Improper selection of borrowers; b) lvfisleadingrninformation during the initiation of the project; c) Low business activity as compared tornDebre Birhan and d) Low level of credit provided to operators in Assela.