Academy of Entrepreneurship Journal Volume 27, Special Issue 2, 2021 Business Analytics for Sustainability 1 1528-2686-27-S2-12 CROSS - SECTIONAL FACTORS INFLUENCING LOAN REPAYMENT CAPACITY OF SMALLHOLDER FARMERS’ Amenu Leta Duguma, AmboUniversity ABSTRACT The study identified factors influencing loan repayment capacity of smallholder farmers’ borrowers. Purposive sampling techniques were used to select 93 respondents. Binary logit model result showed that 47.1 percent of respondent were defaulters and 52.6 percent were non-defaulters. model result indicates sex, marital status, follow-up & supervision, annual income and number of livestock were significant factors to loan repayment capacity of smallholder farmers’. Therefore, follow-up & supervision, consideration for marital status, annual income and number of livestock of borrowers are need government attention and greater consideration during borrowing money in the area. Keywords: Binary Logit, Loan Repayment, Smallholder Farmers INTRODUCTION In subsistence agriculture and low income countries like Ethiopia, where the smallholder farming dominates the overall national economy, small peasant farmers often face scarcity of capital due to a low level of production to adopt new agricultural technologies. Hence, short and medium-term credits with favorable terms for seasonal inputs like fertilizer, improved seeds, pesticide, and herbicides would generally be favored because the better return would be achieved quickly within the cropping season.The performance of the agricultural sector depends to a large extent on the availability of credit which is considered not only as one of the critical inputs in agriculture but also is regarded as an effective means of economic transformation and poverty alleviation. Credit determinant factor of agriculture by providing resources for the purchases of inputs and adoption of new technology cited in Nwankwo (2008) & Nwafor ( 2018). Agricultural is anintersecting input enjoined by the smaller tenant farmers to establish and distend their farms with intention of growing agricultural production, aggravate food adequacy, raisedomestic and general income, and increase the single borrower’s capacity to requite borrowed fund. Agricultural lending involves giving out of credit (in cash and kind) to small scale farmers for farming.Credit plays a decisive partin enlargingthe evolution of agriculture and rural saving. Likewise Oladeebo (2008) argued that trust is Acts of the Apostles as a catalyst that activates the Jinny of growth, endow it to assemble its inherent potentials, and aggrandize in the project or anticipate over sight. Similarly Ojiako & Ogbukwa (2012) identify the economic loan repayment capacity of smallholder farmer that was a vital party credit transformation and rusticun raveling.Particularly agricultural credit is very important for endurable agricultural eduction to be achieved in any region of the Earth Ololade & Olagunju (2013). Rural beliefhas proved to be an energetic instrument against poverty reduction and revelation in rustic areas. Farmers are particularly in the necessity of