Micro financing plays a key role in enabling small business organizations to expand their businesses and fund their operational costs. Micro finance is the supply of microloans, savings; micro insurance and other basic financial services to the poor- particularly those who have been left out by conventional banking institutions. Micro Financial Institutions lend small businesses both short term and long term loans. MFIs have embedded their operations in rural areas with the purpose of alleviating the poverty problem that affects many people. The lending philosophy of MFIs is based on the Grameen Bank model in which social groups form the collateral for receiving a loan. Without legal contractual obligations established to push members to adhere to a stipulated timeframe and interest rates many group members fail to pay back under the lenders' lending conditions. The purpose of this research is to investigate factors influencing loan payment ability of entrepreneurs accessing credit through groups. I. Introduction The success of Grameen Bank of Bangladesh to reach the poor and the marginalized few in the rural areas and raise their status through micro financing has proved that micro financing is a feasible tool for creating economic empowerment among the poor. This success has seen the emergence of financial institution in the financial sector to fill the gap where commercial banks do not venture. Different MFIs operating in various areas have come up with variety financial services tailored to suit in various economic environments. In general, the average loans are fairly low and the default rate is also very low. Strategies used in risk management include; acceptance of chattel mortgage as part of security requirements, conservative loans classification and ageing criteria. MFIs also strengthen credit departments by recruiting a sizeable number of Micro Credit Officers and seasoned credit managers. Risks are attributable to their loans and advances. They structure the level of credit they undertake by placing limits on amounts of risk accepted in relation to one borrower. Such risks are monitored on a regular basis and are subjected to monthly or more frequent reviews. Risk management strategies include; analysis of the ability of and potential to meet interest and principal and repayment obligations, obtaining collateral and corporate guarantee where considered necessary, these institutions have no significant concentration of credit risk, with exposure spread over a diversity of personal and commercial customers. There is also diversity in various sector exposures; there is a comprehensive loan appraisal system, which highly focuses on cash flows. Lending process is guided by branch, head Office, executive and board credit committees with graduated risk limits. Target beneficiaries of these financial institutions are women, small scale business enterprises and the youth who cannot provide adequate collateral to befit from mainstream banks. This is frequently attributed to the lack of property rights in land or to limited ownership of physical or financial assets. Lending programs by these financial institutions either make use of existing social structures or have formed peer groups through which individual members access credit. Groups ensure appropriate borrower selection and screening. Screening helps in determining the likelihood that a borrower will not default on the loan and provide incentives for the to repay and enforce repayment. However there are potential problems that lenders continue to face while dealing with group clients. These problems result directly from imperfect information on projects and the credit worthiness of the clients. This may be attributed to distorted information prevalent in rural areas because of market segmentation by village and kinship groups. The weak legal system and the lack of enforcement mechanisms lead to difficulties in monitoring and obtaining enforcing repayment of loans. Politicization of rural credit; lack of supervision; lack of knowledge about the borrowers affairs over the lifetime of the loan; lack of technical ability among credit lenders to analyze and evaluate the and erratic changes in relative prices which affect disposable incomes adversely affect returns on investments. Additionally relative rate of inflation associated with unstable economy would make small scale vulnerable. They fail to get maximum cash flows from their investments rendering them unable to service their debt credit.