The subject of this study is research of needs and the availability of financing for the small and medium enterprises (SME) in Croatia. The main aim of the studay is to determine the typical sources of financing for the Croatian SME sector. Small and medium-sized enterprises is of great importance for the Croatian economy because it includes as much as 98.9% of all companies that employ 68% of all employed persons and contribute to 53% of total revenue RH. Therefore, the field of interest is to demonstrate the importance of the SME sector in the European Union, and determining the condition for Croatia. Special features related to financing faced by managers in these companies are quite different from the needs of large enterprises, and the study will describe their problems and obstacles. In order to fully realize their capabilities and full potential, the study will compare the Croatian market with the developed markets of the European Union and with comparable transition countries. What source of funding will play the dominant role, depends primarily on the characteristics of the national financial sector, the simplicity and availability of funding sources, such as grants from European Union funds, government incentive programs and subsidization, and the strength and extent of alternative startup business associations (business angels). However, the most important factor in the decision is the size of the company, activity and preferences of managers when it comes to the characteristics of particular sources of financing.