Small and medium enterprises (SMEs) are the most numerous in every economy, including Croatian, where they account for over 99% of the total number of enterprises. Their significance is especially noticeable in the growth of total employment, incomes, export, innovations and the overall development and prosperity of a country’s economy. A solid foundation for successful financing of all enterprises, including SMEs, are financial resources both at the beginning of a business venture as well as throughout the entire life cycle of a company. When compared to large enterprises, SMEs are always in a more unfavourable position for obtaining these financial funds, due to their specific features. In Croatia, SMEs are still mostly financed through bank loans, in the absence of other external sources of funding. With the purpose of presenting the financing of SMEs through bank loans, this paper first explains the functioning of a bank and its core business, and then moves on to elaborate bank loans, which are the bank’s most important and essential corporate activity. Furthermore, the paper elaborates the breakdown of loans intended for enterprises, especially SME sector loans, with a particular overview of SME bank loans in Croatia. Zagrebačka banka is taken as an example of bank loans’ offerings for Croatian SMEs.