Since the seminal papers by Modigliani & Miller (1958, 1963) the analysis of the capital structure decisions has been an important area of research within the field of finance. In accordance, the purpose of this thesis is to investigate the leverage decisions of micro, small and medium-sized enterprises (SMEs) in the Baltic countries, namely the determinants of long-term debt financing of these enterprises. Instead of viewing SMEs as a homogenous group, in this paper, it is distinguished among micro, small and medium-sized enterprises and examined whether the factors that affect capital structure are the same for companies belonging to these different size-based groups. In addition, given that substantial proportions of SMEs in the Baltic countries have zero long-term debt, it is analysed whether determinants of the probability that a firm is using long-term debt financing are the same as determinants of the proportion of this type of financing in capital structure. The results suggest that firm size has a conflicting influence on leverage. Micro firms, on average, are less levered than small or medium-sized firms. However, when only firms with positive long-term debt amounts are considered, the relationship between firm size and the leverage ratio reverses: micro firms, on average, are more indebted than small firms, and small firms, on average, have higher leverage ratios than medium-sized enterprises. In addition, if it is distinguished between the decision to obtain long-term debt financing and the decision on the relative amount of this source of financing, the results of the empirical analysis suggest that the determinants of these two decisions are not the same. Finally, although the results imply that all three size-based groups of SMEs in the Baltic countries behave in accordance with the pecking order theory regarding their capital structure, there are significant differences in the determinants of leverage among these groups. Therefore, in the studies of capital structure of SMEs, it might be useful to consider the three sizedbased groups of SMEs separately.