The paper set to examine the impact of small and medium enterprises on the economic growth of Nigeria. This was discussed based on the impact of micro finance policy in Nigeria. This study assesses the financing options available to Small and Medium Scale Enterprises (SMEs) in Nigeria. Therefore, the paper concludes that the government should focus more on promoting small and medium scale enterprises (SMEs) in Nigeria by giving more microfinance banks opportunity to operate freely and give loan to the SMEs in Nigeria. The major recommendation is that Capacity building and sensitization programmes for all registered SMEs should be put in place by government to enlighten them on the benefits of good risk management and insurance of their businesses. Both the government and the banking sector should mutually agree on a credit guaranteed scheme strategy that will incorporate a risk-sharing arrangement as a way of encouraging the banks to channel funds to the SMEs sub sector for their growth and development which would translate into the national economic growth and sustainable economic development of Nigeria.