This paper was conducted in order to identify the impacts of group based lending on borrowers’ welfare by employing multiple linear regression using econometric analysis based on randomly drown 150 borrowers in Hawassa surroundings which is found in Sidama Zone SNNP Region, Ethiopia. The study found that among explanatory variables amount of credit, monthly income before credit, and being gender of respondents have positive and significant relationship with the current income level of household. This study revealed that credit provision to Microenterprise has a great role on the reduction of poverty in terms of rising income level of the beneficiaries, increasing self[1]employment, improving living status, empowering Women and generally inducing the seed for development of rural areas. Therefore strengthening the voluntary saving account is the key missing element of the microenterprises project. Credit is short term measures directed at encouraging enterprises. It may not last forever. So, beneficiaries must be encouraged towards saving their surpluses both individually and through associations.
