The thesis examines the financing behaviour of Small and Medium sized Enterprises (SMEs) over the business cycle, focusing on the impact of the 2008 financial crisis, using panel data analysis. The analysis is presented in three studies. Study 1 is a position paper which compares the effectiveness of pecking order theory with the trade-off theory in explaining the changes in SME capital structure over the crisis, using a sample of Irish and UK companies. The findings indicate a significant deleveraging in SMEs in the immediate aftermath of the financial crisis, using a modified flow of funds methodology. Given the declining role of debt, Study 2 examines the role of trade credit in the adjustment process in the sector via redistribution and substitution effects, in a panel of over 7600 SMEs in Ireland, over the period 2003 to 2011. While there was a net reduction in trade credit in the sector in the aftermath of the banking crisis, the findings show that financially weaker firms received significantly more finance in the form of trade credit coinciding with the dramatic reduction of bank credit extended to the private non-financial sector. In terms of a redistribution effect; financially stronger firms extended relatively more trade credit to financially weaker SMEs, and most likely on an involuntary basis. Finally, using an extensive panel of over 280,000 SMEs across 15 European countries, Study 3 confirms the domestic results in a cross country context and shows that trade credit has played a pivotal role in the financing of financially weaker SMEs over the crisis. Firms with the greatest level of cash reserves became net financiers of credit. The results also show the relation between trade credit and SME survival as well as the role of institutional and country level factors in explaining trade credit use.