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How do firms finance themselves? How do they finance their investment? What are the factors that influence the firm’s financing decisions? The aim of this paper is to test the application of the different financing theories for explaining the capital structure choice of small and medium enterprises (SMEs). The paper presents an empirical analysis on 764 non-financial Italian SMEs. This sample presents high heterogeneity, but it represents an important starting point. The results show that the financing decisions in these firms could be explained by the main capital structure theories: pecking order theory (POT), trade-off theory and fiscal theory. In accord with the POT, the results confirm an approach comprising an initial check on the availability of internal resources, followed by the use of external capital (particularly bank debt). This is an exploratory study. The results represent a base for further research and analysis …