Purpose: Minor companies are the most common companies in Sweden that drive Sweden's growth. These companies are facing difficulties in obtaining external finance. On the other hand, financiers consider these companies risky and unsafe to lend to. The purpose of the study was to investigate how minor companies have been established and how they contribute for Sweden's economical growth despite the financing difficulties. This study is covering the financing of minor companies operating in the service industry. The study creates an understanding of financing opportunities and difficulties for minor companies in obtaining capital to operate their business and growth in Sweden. The study also investigated the extent to which smaller companies' financing can be explained by the pecking order theory and the trade off theory.    

Method: The study is based on a qualitative research strategy with semi-structured interviews. The sample consists of eleven minor companies, where five of the companies are small and six micro companies. 

Results and conclusions: This study shows that smaller companies' financing is not a choice but an adjustment according to the available financing opportunities. The companies are mainly financed internally because it's more available, and supplemented by external financing when capital is needed. In need of external financing are mortgages covering capital needs, and sometimes leasing is covering the needs of equipment. The study also shows that minor companies face difficulties in obtaining capital as a result of the financial gap and the economic life cycle, which is based on prevailing risk and information asymmetry. In the early life cycle phases, the financing opportunities of small companies are limited, therefore they are financed through available alternatives of financing. In later life cycle phases, financing opportunities increase as a result of reduced risk as companies become market-established and stable. The study shows that it is not possible for minor companies to freely choose their capital structure and that they do not have full knowledge of various external forms of financing, which do not act in line with the pecking order theory and the trade off theory.