This paper provides the role of Iqqub in business start-up and development in small and medium enterprises in Arba Minch. Iqqub plays a prominent role in the business start up and development with regard to providing credit without interest or at lower interest, sharing ideas with others, enforced saving mechanism, providing credit without mortgage. The Iqqub members are getting more benefit than iqqub organizers and their source of income is trade and manufacturing. The results of the study found that the private businesses prefer iqqub rather than financial institutions mainly due to obtaining credit without interest. The trustfulness of the members for the rules they agreed on and accepting person for collaterial intead of collaterial for fixed asset are the experiences to be learned from iqqubs by formal financial institutions and government.

Keywords: Iqqub; Members; Start Up; Incomes; Small and Medium Businesses.