What is an SME?

Now there’s a good question and why does it matter?

The answer is that many EU and UK Government schemes use the definition to establish eligibility for grants or support.

Download the form to declare your company is an SME

Simple Explanation

There are a number of definitions of a Small and Medium Sized Enterprise, but lets start with the simplest, and SME is a business with less than 250 employees.

SMEs – Break down into Micro (1-9 Employees), Small (10-49), Medium (50-249)

EU Definition

Small and medium-sized enterprises (SMEs) are defined in the EU recommendation 2003/361.

The main factors determining whether a company is an SME are:

  1. number of employees and
  2. either turnover or balance sheet total.
Company category Employees Turnover or Balance sheet total
Medium-sized < 250 ≤ € 50 m ≤ € 43 m
Small < 50 ≤ € 10 m ≤ € 10 m
Micro < 10 ≤ € 2 m ≤ € 2 m

These ceilings apply to the figures for individual firms only.

The EU definition adds an SMEs has less than 250 employees; and has either an annual turnover not exceeding €50 million or  balance-sheet less than €43 million and whose capital or voting rights, 25 per cent or more is not owned by one enterprise, or jointly by several enterprises, that fall outside this definition of an SME.

This threshold may be exceeded in the following two cases:
(a) if the enterprise is held by public investment corporations, venture capital companies or institutional investors provided no control is exercised either individually or jointly, or
(b) if the capital is spread in such a way that it is not possible to determine by whom it is held and if the enterprise declares that it can legitimately presume that it is not owned as to 25% or more by one enterprise, or jointly by several enterprises, falling outside the definitions of an SME.