This study investigated the relationship between mobile banking services and loan performance in selected Microfinance Institutions (MFIs) within Mukono District, Uganda. Against the backdrop of mobile money's proliferation and its potential to enhance financial inclusion, the research sought to empirically determine the perceived impact of these digital services on key loan performance metrics. A descriptive research design was employed, and data were collected through questionnaires from a sample of clients and staff of the selected MFIs. Descriptive statistics, including mean scores and standard deviations, were used to analyze the data. The results indicated a strong positive perception among respondents regarding the contribution of mobile banking to loan performance. The highest mean score (4.21) was associated with the statement that “Mobile transactions have increased loan repayment convenience.” Respondents also strongly agreed that mobile platforms streamlined loan applications (Mean = 4.12) and that real-time SMS alerts improved communication and monitoring (Mean = 4.06). Crucially, the analysis demonstrated that mobile banking services were perceived to have a tangible effect on reducing loan defaults and improving overall loan performance, with mean scores ranging from 3.93 to 4.14. The moderate standard deviations (0.92–1.02) suggested a general consensus on these benefits. These findings aligned with the theoretical framework of the Technology Acceptance Model (TAM) and prior empirical studies, confirming that the perceived usefulness and ease of use of mobile banking directly influenced its positive outcomes. The study confirmed that the adoption of mobile banking services was perceived to have significantly enhanced loan performance in the sampled MFIs. The integration of mobile platforms led to increased repayment convenience, improved loan monitoring, and a reduction in default rates, thereby strengthening the operational efficiency and financial sustainability of the institutions. Based on the findings, the study recommends that MFI managers and policymakers actively promote and invest in the deeper integration of mobile banking technologies into all stages of the loan cycle. Specifically, MFIs should enhance their digital infrastructure, develop user-friendly mobile application interfaces, and leverage SMS services for proactive customer engagement. Furthermore, policymakers should work towards creating a regulatory environment that fosters innovation and security in digital financial services to maximize these positive outcomes across the microfinance sector.