This thesis investigates the Impact of Deposit Money Banks Loan on the Performance of Small and Medium Enterprises in Nigeria, between 1990 and 2014. The variables used for this study are secondary data generated from Central Bank of Nigeria (CBN) statistical bulletin, Volume 26, December 2014 and National Bureau of Statistics (NBS). These data include the Gross Domestic Product, deposit money bank loans to small and medium enterprises, deposit money bank loans to the Agricultural sector, prime lending rates, loans to rural branches of deposit money banks, and small and medium enterprises output (contribution to GDP). However, SMEs outputs were proxy by the contribution of the sum of three sectors to the GDP. These sectors have the highest element of SMEs in them, they are Agriculture; Real Estate, renting and business; and other community, social and personal services sectors. Augmented Dickey-Fuller (ADF), unit root test, Co-integration and Granger causality test were applied to analyze data. Unit root test confirms the stationary of all variables at first and second difference. Regression results show that significant relationship exists between deposit money banks loans and SMEs output in Nigeria. The findings revealed that loans to the Agriculture sector and loans to the rural branches of DMBs have a significantly positive relationship with SMEs output, the other two variables, Loans to SMEs and Prime lending rates shows negative and insignificant sign. It is recommended that there is a need for monetary policy development that favors more loans allocated to the SMEs sector, reduces the prime lending rate, moderate collateral and encourage savings amongst rural dwellers in order to stimulate and enhance SMEs growth.