Micro and small business is an entity that is privately owned and operated, with a small number of employees and relatively low volume of sales. The term MSE incorporates firms in both the formal and informal sectors. The main purpose of this study is to critically evaluate the loan repayment performance of privately owned small-scale enterprises financed by Omo Micro Finance Institution and to investigate the major determinants behind their loan recovery record and to examine the impact of the identified factors on the loan repayment performance of Micro and Small Enterprises credit scheme. In this study both descriptive and causal type of the Research design is used Population comprised of Borrowers of 278 Micro and Small Enterprises of Omo micro finance in Wolaita Sodo town. Stratified Random sampling is used. the first stage, by stratified sampling 164 MSEs were selected based on the pre-determined scientific method from five different sectors of enterprise organization in the sector from the town. For the study Primary as well as secondary data had been used. Structured questionnaire had been used to collect first hand data from small and micro enterprises through field survey. The data collected from the field were analyzed using the descriptive statistical tools like percentages, mean and standard deviation. In addition, the regression model (multiple regression models) had been used to analyze the loan repayment performance of the micro and small enterprises. The variables are Beneficiary size of the enterprises, business related experience, loan size, loan supervision, loan initiation and suitability of repayment situation. The evidences of both descriptive analysis and multiple regression show that business related experience is found to be one of the major determinants adversely affecting the loan repayment performance.The informal sector will benefit from the study findings by understanding the reasons why financial institutions are not able to meet some of their financial demands whilst having pending loan repayment cases from their sector. The study is expected to stimulate more research on factors that influence loan repayment in other sectors of the economy and develop ways in which loan repayment rates can be improve
