The major objective of this study lied in finding out whether there was a relationship between micro finance institutions and the development of small-scale businesses in Kisoro Municipality. Other objectives included: To establish the level of performance of microfinance institutions in Kisoro Municipality and to find out the extent of development of small-scale businesses in Kisoro Municipality. The study employed a qualitative and quantitative research design and simple random probability sampling and purposive sampling techniques were used to obtain a sample size 80 respondents of from Kisoro Municipality using solvin’s formula. Questionnaires and interview guides were used to collect data from respondents about the relationship between micro finance institutions and the development of smalls c a l e businesses in Kisoro Municipality, and the researcher considered 38 traders, 40 community members, LC1 Chairperson and a district development officer. The researcher found out that there is a very strong positive relationship between micro finance institutions and small-scale businesses at r = 0. 786 and since the sig. value (.000) was far less than 0.01, which is the maximum level of significance required declaring a significant relationship between micro finance institutions and small-scale businesses, this implies when the level of growth of micro finance institutions is high, the level of growth of small-scale businesses is also high, and when the level of development of micro finance institutions is low, the level of development of small-scale businesses is also low. The researcher concluded that the extent of development of small-scale businesses is high and this is witnessed by many people involving in small business in Kiso Municipality. The researcher recommended the government to provide enough sensitization to the people about the use of the available micro finance institutions in Kisoro District.