Over the last two decades, small and medium-sized enterprises have played an increasingly important role in economies around the world and continue to be an important tool for economies, especially for the growth of developing countries. The main challenge faced is the level of credit risk. A bank's objective is to maximize the risk-adjusted rate of return; therefore credit risk management is essential for long-term profitability and lending. Loans (credits) represent the most common credit risk that banks must manage (Basel Committee on Banking Supervision, 2000). In this article, credit risk will refer to the risk that banks expose themselves to when they lend money to businesses, in our case small and medium-sized businesses1.3. Sources of FinancingThe survival of any business depends on its ability to raise funds for its activities. Every business needs capital to at least: start, grow, prosper, expand, compete and survive. Where do businesses get the liquidity they need to fund their operations? Generally, companies generate cash through their operations. They also raise money through loans from lenders, often referred to as debt financing, and through the sale of part of their property, called equity financing. As economies continue to face credit challenges, due to the financial crisis, small businesses, especially new, small and medium sized businesses, are finding it even more difficult to secure the financing they need to turn their ideas and concepts into businesses. profitable. Although small and medium-sized enterprises in developing countries are a potential starting point for any lasting industrialization that contributes to long-term growth, producing and increasing the number of companies growing out of the small sector… half of the paper ...... Jaime F. Zender (2010). Debt capacity and tests of capital structure theories. Journal of Finance and Quantitative Analysis, 45, pp 1161-1187. doi:10.1017/S0022109010000499.H. DeAngelo and R. Masulis. “Optimal Capital Structure for Corporate and Personal Taxation.” Journal of Financial Economics 8 (March 1980), 3–29. CrossRef, Web of Science® Times Cited: 335Bryman, A (2006) Integrating quantitative and qualitative research: how is it done? Qualitative Research, Vol.6 No. 1, pp. 97 – 113Sheridan Titman and Roberto Wessels (2012) The Determinants of Capital Structure Choice, The journal of finance, 30 APR 2012, DOI: 10.1111/j.1540-6261.1988.tb02585. xSatish Raj Pathak (2011Fakher Buferna Kenbata Bangassa and Lynn Hodgkinson.(2005) Determinants of capital structure: Evidence from Libya, The University of Liverpool, Research paper. No. 2005/08. ISSN 1744-0