Abstract: The importance of loan structure has not been emphasized by microenterprises when it comes to management of loan risks and performance of the microenterprise. The study therefore investigated the effect of loan structure on the performance of microenterprises in Eldoret Town, Kenya. The specific objectives guiding the study are to evaluate the effect of installments on the performance of microenterprises in Kenya, to determine the effect of repayment period on the performance of microenterprises in Kenya, to find out the effect of loan interest on the performance of microenterprises in in Kenya and to establish the effect of loan security on the performance of microenterprises in Kenya. This research was guided by three theories; the Pecking Order Theory of Financing, Adverse Selection Theory of Financial Markets and Ex Ante Theory of Collateral.