Finance is one o f the factors occupying an important place in all types o f economic activities. The growth o f any industry largely depends upon the availability o f adequate finance in proper time. Financing o f Small Scale Enterprises is that critical aspect which gains special attention o f banks and other financial institutions. It is included in priory sector lending. This paper presents views o f different authors about the financing o f small scale industries. More specifically, it throws light on the significance o f informal (family or personal) and formal (banks) sources offinance at different stages o f growth. The literature suggests that both form al and informal institutional support have played a limited role in fostering small entrepreneurial expansion. Although bank finance is valuable in fo r small industries but small entrepreneurs do not rely on it at the initial stage o f business. There is a great scope o f research in this field, especially in the Indian context because the SSIs occupies a unique position in the Indian Economy fo r its contribution towards value addition, employment generation, and the expansion o f entrepreneurial base and also fo r the diversification o f the industrial sector.