This document analyses the effects at the firm level of the credit cycle observed in Colombia during the 90s.The role of financial restrictions over firms' investment allocation is studied by using the standard Euler equation for investment, and a large panel of firms from 1991 to 2001.The empirical results suggest that Colombian firms, particularly small and highly indebted ones, do face capital market imperfections on their access to external finance, and that these restrictions severed after the financial crisis of the late 90's.Furthermore, the difficulty in obtaining external resources of the constrained firms, responds mainly to the limited availability of funds (credit crunch), rather than to their cost (interest rate).