The Local Government Loans Board was introduced as a Local Councils Board under the Local Government Ordinance, Cap 333 of the year 1953. The Board was intended to assist Local Government Authorities (MSM) where those authorities gave donations to run the Board. These donations were used to lend the authority in beneficial Community projects such as schools, health centers, construction of staff houses, administration buildings etc. The funds were also used to lend Local Government Authorities to address issues of emergencies and natural disasters.

In 1965, xii section of the Local Government Ordinance was amended to allow for the establishment of the Local Government Loans Board and have town Councils also contribute and benefit from the services provided by the Board. Town Councils were previously contributing to Urban Local Authorities Loans Fund.

From 1965 to 1972, the Loans Board provided facilities to local government authorities for various purposes. Some of the achievement include construction of administrative buildings in the City Councils of Mwanza and Mbeya, Morogoro, Dodoma, Bukoba and Moshi Municipalities. Other buildings Administration built by using funds borrowed from the Local Government Loans Board include Nzega, Rungwe, Mbulu and Arumeru District Councils. The Loans Board was abolished in 1972 and re – established in 1986 under section 56 of the Finance Act, Local Government, and Chapter 290 is shed review in 2002. The main objective of the creation of the Board is to provide concessional loans to the Local Government Authorities. Structurally, the Board is under the President’s Office, Regional Administration and Local Government as part of the authority given (semi-autonomy) to operate in accordance with the law creating the Board. On that basis, the Board under Section 60 of the Law of the Local Government Finance, Chapter 290 is required to perform the following functions:-

a)    To receive, manage and invest the money of the Board,
b)    Financial lend Local Government Authorities to implement development projects and the provision of services,
c)    Providing financial support to Local Government Authorities through grants, guarantees (guarantees) or in other ways,
d)    To provide and operate Services on behalf or for the benefit of local government authorities.

ROLE OF THE BOARD
The aim of the Board is the Board of handling by providing affordable loans. For it is the duty of the Board to ensure that:-
(i)    They recognize the importance of this tool (SLB) that belong to them;
(ii)    It helps in strengthening the Board to provide services more efficiently;
(iii)    Needed to give his contribution to the Board in accordance with the laws, rules and regulations;
(iv)     Loans drawn restored to time in accordance with the agreements and procedures; and
(v)    Encourage leaders and executives to have the awareness and perception of development and consider investing in order to bring economic change.

SOURCES OF FINANCING BOARD
Board to be; Article 62 of the Law of Credit Board mentions various ways in which the Board utilize them to get money to implement different activities of the Board. These options include:-

(A) To earn money as approved by Parliament for the purposes of running the activities of the Board.

(B) Comments Savings (Minimum Compulsory Reserve – MCR) which is legal. Each council is required to keep a savings to the Board.

(C) The established deposit funds to the Board and the Local Government Authority or the established in any other way.

(D) Grants, subsidies in accordance with the Board shall also receive various times from anyone or any group.