SMEs are the considered the growth engine of economy they contribute to the economy by creating job opportunities and by developing entrepreneurs’ activities. So, it is essential to find out the factors that hinders their growth. This study determines the obstacles that SMEs are facing in Dera Ismail Khan a small city in Khyber-Pakhtunkhwa province of Pakistan. The study uses a sample of 237 respondents through a survey. The study identifies the obstacles related to Management, Marketing, Human Resource, Legal matters, Financial and general obstacles. Further the study uses regression analysis to identify the relationship between these obstacles and growth of SMEs, the growth of SMEs is measured through annual sales turnover of the SMEs. The results of the study showed that the SMEs perceives HR issues, financial problems, and Marketing problems to be the most significant issues that hinders their growth. Supervisor:- Dr. Hafsa Hina