Abstract: The paper gives some theoretical analysis and empirical research on co st preferences of small enterprise debt financing from the angle of information and transaction cost. It finds that it is the transaction cost,not the direct a ccrual expenditure cost,that is the most important factor and determines the fi nancing preference decision-making of small enterprises. From the marketable se lection behaviors of small enterprises, the paper concludes that it has weaker a nd weaker financing preference series as follows: informal finance, regional for mal finance and national formal finance.