Введение
Тип предприятия с небольшим числом сотрудников. Малые и средние предприятия (МСП) или малые и средние предприятия (МСП) – это предприятия, численность персонала и объемы выручки которых не превышают установленных пределов. Аббревиатура "МСП" используется международными организациями, такими как Всемирный банк, ОЭСР, Европейский союз, Организация Объединенных Наций и Всемирная торговая организация (ВТО). В любой национальной экономике количество МСП зачастую значительно превышает количество крупных компаний, а также они обеспечивают большее количество рабочих мест. Например, австралийские МСП составляют 98% всех австралийских предприятий, производят треть общего ВВП (валового внутреннего продукта) и обеспечивают занятость 4,7 миллиона человек. В Чили в 2014 году 98,5% предприятий были классифицированы как МСП. В Тунисе самозанятые работники составляют около 28% от общей занятости вне сельского хозяйства, а предприятия с численностью менее 100 сотрудников обеспечивают около 62% общей занятости. В США МСП создают половину всех рабочих мест, но только 40% ВВП. В развивающихся странах, как правило, доля малых и средних предприятий выше. Несмотря на то, что они создают больше новых рабочих мест, чем крупные предприятия, МСП также несут основные потери рабочих мест и сокращения. Согласно базе данных FINDEX 2021 года Группы Всемирного банка, существует разрыв в финансировании в размере 1,7 триллиона долларов для формальных микро-, малых и средних предприятий, принадлежащих женщинам. Кроме того, более 68% малых предприятий, принадлежащих женщинам, не имеют доступа к финансированию. Обзор.
Type of business with small personnel numbers
Small and medium sized enterprises (SMEs) or small and medium sized businesses (SMBs) are businesses whose personnel and revenue numbers fall below certain limits. The abbreviation "SME" is used by international organizations such as the World Bank, the OECD, European Union, the United Nations, and the World Trade Organization (WTO). In any given national economy, SMEs sometimes outnumber large companies by a wide margin and also employ many more people. For example, Australian SMEs makeup 98% of all Australian businesses, produce one third of the total GDP (gross domestic product) and employ 4.7 million people. In Chile, in the commercial year 2014, 98.5% of the firms were classified as SMEs. In Tunisia, the self employed workers alone account for about 28% of the total non farm employment, and firms with fewer than 100 employees account for about 62% of total employment. The United States' SMEs generate half of all U. S. jobs, but only 40% of GDP. Developing countries tend to have a larger share of small and medium sized enterprises. Although they create more new jobs than large firms, SMEs also suffer the majority of job destruction/contraction. According to the World Bank Group's 2021 FINDEX database, there is a $1.7 trillion funding gap for formal, women owned micro, small, and medium sized enterprises. Additionally, over 68% of small women owned firms lack access to finance.' Overview
SMEs are important for economic and social reasons, given the sector's role in employment. Due to their sizes, SMEs are heavily influenced by their Chief Executive Officer, a. k. a. CEOs. The CEOs of SMEs are often the founders, owners, and managers of the SMEs. The duties of the CEO in a SME mirror those of the CEO of a large company: the CEO needs to strategically allocate their time, energy, and assets to direct the SMEs. Typically, the CEO is the strategist, champion and leader for developing the SME or the prime reason for the business failing. At the employee level, Petrakis and Kostis (2012) explore the role of interpersonal trust and knowledge in the number of small and medium enterprises. They conclude that knowledge positively affects the number of SMEs, which in turn positively affects interpersonal trust. Note that the empirical results indicate that interpersonal trust does not affect the number of SMEs. Therefore, although knowledge development can reinforce SMEs, trust becomes widespread in a society when the number of SMEs is greater. Legal boundary on SMEs around the world
Multilateral organizations have been criticized for using one measure for all. The legal boundary of SMEs around the world vary, and below is a list of the upper limits of SMEs in some countries. Africa
African small businesses frequently struggle to get the cash they require to thrive. According to the SME Finance Forum, the formal financing gap for African SMEs averaged 17% of GDP across the 43 countries assessed in 2017. According to the World Bank, women own 58% of all MSMEs in Africa. The European Investment Bank's Banking in Africa survey, 2021 suggests that most of the responding banks had a non performing loan (NPL) ratio of at least 5%. NPLs account for at least 10% of the SME portfolio in approximately one third of African banks. Furthermore, 50% of the banks had at least 5% of their SME portfolio under the moratorium, and 40% had at least 5% of SME loans under some type of restructuring. Somalia
In Somalia, the term is SME (for "small, medium, and micro enterprises"); elsewhere in Africa, MSME stands for "micro, small, and medium enterprises". An SME is defined as a small business that has more than 30 employees but less than 250 employees. South Africa
In the National Small Business Amendment Act 2004, micro businesses in the different sectors, varying from the manufacturing to the retail sectors, are defined as businesses with five or fewer employees and a turnover of up to R100,000 ZAR ($6,900). Very small businesses employ between 6 and 20 employees, while small businesses employ between 21 and 50 employees. The upper limit for turnover in a small business varies from R1 million ($69,200) in the agricultural sector to R13 million ($899,800) in the catering, accommodations and other trade sectors as well as in the manufacturing sector, with a maximum of R32 million ($2,214,800) in the wholesale trade sector. Medium sized businesses''' usually employ up to 200 people (100 in the agricultural sector), and the maximum turnover varies from R5 million ($346,100) in the agricultural sector to R51 ($3,529,800) million in the manufacturing sector and R64 ($4,429,600) million in the wholesale trade, commercial agents and allied services sector. A comprehensive definition of an SME in South Africa is, therefore, an enterprise with one or more of the following characteristics:
Fewer than 200 employees,
Annual turnover of less than R64 million,
Capital assets of less than R10 million,
Direct managerial involvement by owners
Asia
SMEs account for nearly 90% of all company entities in developing Asian countries and are the principal private sector employers, supplying 50 80% of all jobs. SMEs cover 97 99% of all firms in South east Asia, contributing considerably to each country's GDP—for example, 46% in Singapore, 57% in Indonesia, and over 40% in other nations. 98% of business establishments in Hong Kong are defined as SMEs and employed 45% of the work force. India
India defines Micro, Small and Medium Enterprises based on dual criteria of investment and turnover. This definition is provided in Section 7 of Micro, Small & Medium Enterprises Development Act, 2006 (MSMED Act) and was notified in September 2006. The Act provides for the classification of enterprises based on their investment size and the nature of the activity undertaken by that enterprise. As per MSMED Act, enterprises are classified into two categories manufacturing enterprises and service enterprises. For each of these categories, a definition is given to explain what constitutes a micro enterprise or a small enterprise or a medium enterprise. If an enterprise does not fall under the above categories, it would be considered a large scale enterprise. In June 2020, India updated the definition as follows:
+Sr NoClassificationCriteria (in ₹)1Micro EnterprisesInvestment <= 1 cr and Turnover <= 5 cr2Small EnterprisesInvestment <= 10 cr and Turnover <= 50 cr3Medium EnterprisesInvestment <= 50 cr and Turnover <= 250 cr
Businesses that are declared as MSMEs and within specific sectors and criteria can then apply for "priority sector" lending to help with business expenses; banks have annual targets set by the Prime Minister's Task Force on MSMEs for year on year increases of lending to various categories of MSMEs. MSME is considered a key contributor to India's growth and contributes 48% to India's total export. Indonesia
In Indonesia, the government defines micro, small, and medium enterprises (Indonesian: usaha mikro kecil menengah, UMKM) based on their assets and revenues according to Law No. 20/2008:
Type Maximum assets, Rp Gross Revenue, Rp Number of Employee Statistics Indonesia Micro maximum 50,000,000 maximum 300,000,000 1 4 Small 50,000,000 500,000,000 300,000,000 2,500,000,000 5 9 Medium 500,000,000 10,000,000,000 2,500,000,000 50,000,000,000 20 99 Large >10,000,000,000 >50,000,000,000 >99
An annual revenue of Rp 50 billion is approximately equal to US$3.1 million as of April 2024. Despite their significant contribution to GDP and job creation, Indonesian MSMEs confront a number of obstacles. One of the most significant is capital access: 60 70 percent of MSMEs lack access to financial institutions and their funding options. Other restrictions include inadequate infrastructure, difficulties acquiring company licences and permissions, high tax rates, political insecurity, and improving their brand image in the digital era. 21st century businesses strategically use both their websites and social media in order to advertise their products and control their branding. Quality content on both information streams will positively affect branding and attract customers. The People's Business Credit (Kredit Usaha Rakyat, or KUR [id]) was established in 2007 by President Yudhoyono to extend credit to businesses that were considered "feasible but not bankable". Bank Rakyat Indonesia conducts more than half of KUR lending nationwide. In Jakarta, the capital city of Indonesia, 529 MSMEs with the potential to be funded have been identified by Bank Indonesia. Economy Sector Number of Companies Processing Industry 151 Health Services and Social Activities 1 Rental leasing services without option rights, employment, travel agents and other business support 9 Professional, Scientific And Technical Services 11 Other Service Activities 21 Arts, Entertainment And Recreation 1 Construction 2 Water Procurement, Waste Management And Recycling, Waste And Garbage Disposal And Cleaning 1 Provision of Accommodation and Provision of Food and Drink 80 Wholesale and retail trade of car and motorcycle repair and maintenance 236 Agriculture, Forestry, and Fisheries 16
Philippines
According to the Department of Trade and Industry's 2020 List of Establishments report, there are 957,620 registered business enterprises operating in the country, composed of 99.51% MSMEs and 0.49% large firms. The MSMEs consist of 88.77% microenterprises, 10.25% small enterprises, and 0.49% medium enterprises. Among the top industry sectors include (1) wholesale and retail trade; repair of motor vehicles and motorcycles (445,386); (2) accommodation and food service activities (134,046); (3) manufacturing (110,916); (4) other service activities (62,376); and (5) financial and insurance activities (45,558) which accounted for about 83.77% of the total number of MSME establishments. Prior to the pandemic, MSMEs generated more than 5.38 million jobs or 62.66% of the country's total employment with a 29.38% share from micro enterprises followed by 25.78% and 7.50% for small and medium enterprises. Europe
European Union
Small companies are important to the European economy as they account for 99.8% of non financial enterprises in the European Union (EU) and employ two thirds of the workforce in the EU. The majority of European firms are small and medium sized enterprises (SMEs), employing over 100 million people. Due to the COVID 19 pandemic, a large majority of SMEs saw a decline in revenue during 2020 2021. Medium sized businesses (or mid caps) play an important role in the European economy, accounting for a considerable part of employment and wealth production. According to a recent European Commission analysis, mid cap companies (250 3000 people) make up about 17% of total employment and 21% of turnover in the EU27 business sector. Micro firms (with fewer than nine employees) employ 38% of the total workforce, while SMEs with fewer than 250 employees account for 34.4%. Larger (XL) firms with 3,000 or more employees account for 10.1% of overall employment in EU business sectors. According to Eurostat SBS statistics, in 2021, tiny enterprises (0 9 workers) and SMEs (excluding micro firms) employed around 30% and 34.5% of the entire workforce in EU27 business sectors, while bigger firms (250+ employees) contributed for 36.4% of overall employment. The pandemic has had a greater impact on SMEs than on large businesses, with an average sales loss of 26% versus 23% for large businesses. Government assistance appears to have benefited SMEs more than large corporations among the companies that do have overdraft facilities, indicating a successful application of policies to ease financial limitations for SMEs even when they receive help from the banking sector. The EIB Group contributed more than €16.35 billion to small and medium sized firms in 2022. SMEs were more quick in altering output during the pandemic, despite the intensity of the shock. In reaction to the crisis, one third of major enterprises altered their output or services, compared to 37% of SMEs. The criteria for defining the size of a business differ from country to country, with many countries having programs of business rate reduction and financial subsidy for SMEs. According to the European Commission, SMEs are enterprises which meet the following definition of staff headcount and either the turnover or balance sheet total definitions:
Company category Staff headcount Turnover Balance sheet total Medium sized < 250 ≤ €50 million ≤ €43 million Small < 50 ≤ €10 million ≤ €10 million Micro < 10 ≤ €2 million ≤ €2 million
In July 2011, the European Commission said it would open a consultation on the definition of SMEs in 2012. A consultation document was issued on 6 February 2018 and the consultation period closed on 6 May 2018. as of November 2019, no conclusions or responses have yet emerged. In Europe, there are three broad parameters that define SMEs:
Micro enterprises have up to 10 employees
Small enterprises have up to 50 employees
Medium sized enterprises have up to 250 employees. The European definition of SME follows: "The category of micro, small and medium sized enterprises (SMEs) is made up of enterprises which employ fewer than 250 persons and which have an annual turnover not exceeding 50 million euro, and/or an annual balance sheet total not exceeding 43 million euro." In order to prepare for an evaluation and revision of some features of the small and medium sized enterprises definition European Union established public consultation period from 6 February 2018 to 6 May 2018. Public consultation is available for all EU member country citizens and organizations. Especially, national and regional authorities, enterprises, business associations or organizations, venture capital providers, research and academic institutions, and individual citizens are expected as the main contributors. EU member states have had individual definitions of what constitutes an SME. For example, the definition in Germany had a limit of 255 employees, while in Belgium it could have been 100. The result is that while a Belgian business of 249 employees would be taxed at full rate in Belgium, it would nevertheless be eligible for SME subsidy under a European labelled programme. SMEs are a crucial element in the supplier network of large enterprises which are already on their way towards Industry 4.0. According to German economist Hans Heinrich Bass, "empirical research on SME as well as policies to promote SME have a long tradition in [West] Germany, dating back into the 19th century. Until the mid 20th century, most researchers considered SME as an impediment to further economic development and SME policies were thus designed in the framework of social policies. Only the Ordoliberalism school, the founding fathers of Germany's social market economy, discovered their strengths, considered SME as a solution to mid 20th century economic problems (mass unemployment, abuse of economic power), and laid the foundations for non selective (functional) industrial policies to promote SMEs." Only around 20% of European SMEs are substantially digitalized, compared to almost 50% of major businesses. Small and medium sized companies make up 56.2% of the non financial sector. Smaller companies account for more than 60% of the value contributed to the non financial sector in Belgium, Italy, and Spain, three of the nations worst hit by the COVID 19 pandemic. An estimated 50% of Europe's small firms may fail because they lack the substantial financial reserves required to weather the crisis. With around 338,000 functioning in Bulgaria in 2022, SMEs and mid caps are major contributors in the Bulgarian economy. They also employ over 75% of the workforce and create 65% of the economy's added value. The results of an EU survey conducted in 2021 suggest that during the pandemic, in countries with larger fiscal packages, SMEs were on average more likely to experience bankruptcy even after controlling for the size of the shock, the use of bank financing, and country and sector fixed effects. When policy assistance rises by 1% of GDP, the probabilities of bankruptcy for a SME are 2.7 times higher than for a non SME. Credit limitations are especially difficult for SMEs and new businesses to overcome. Credit constraints affect 24% of SMEs and 27% of young businesses. Poland
The SME sector in Poland generates almost 50% of the GDP, and out of that, for instance, in 2011, micro companies generated 29.6%, small companies 7.7%, and medium companies 10.4% (big companies 24.0%; other entities 16.5%, and revenues from customs duties and taxes generated 11.9%). In 2011, out of the total of 1,784,603 entities operating in Poland, merely 3,189 were classified as "large", so 1,781,414 were micro, small, or medium. SMEs employed 6.3 million people out of the total of 9.0 million of labour employed in the private sector. In Poland in 2011 there were 36.2 SMEs per 1,000 inhabitants. Nearly seven million people are employed by small businesses in Poland, which accounts for around half of the country's GDP, yet smaller businesses are less likely than larger ones to invest in strategies to combat climate change or boost energy efficiency. In October 2021, the Bank Ochrony rodowiska, a Polish bank that specializes in funding environmental protection initiatives received €75 million from the European Investment Bank (EIB) for these small enterprises. The Polish bank wants to use at least 50% of the loan for initiatives with a clear emphasis on tackling climate change, such improving building energy efficiency or turning to renewable energy sources like solar power. The money is set to be distributed across Poland, with around 80% of it projected to go to cohesive regions. Very small companies are called in the UK micro entities, which have simpler financial reporting requirements. Such micro enterprises must meet any two of the following criteria: balance sheet £316,000 or less; turnover £632,000 or less; employees 10 or less. Many small and medium sized businesses form part of the UK's currently growing Mittelstand, or Brittelstand'' as it is also sometimes named. These are businesses in Britain that are not only small or medium but also have a much broader set of values and more elastic definition. The Department for Business Innovation and Skills estimated that at the start of 2014, 99.3% of UK private sector businesses were SMEs, with their £1.6 trillion annual turnover accounting for 47% of private sector turnover. In order to support SMEs, the UK government set a target in 2010 "that 25% of government’s spend, either directly or in supply chains, goes to SMEs by 2015"; it achieved this by 2013.
Small and medium sized enterprises (SMEs) or small and medium sized businesses (SMBs) are businesses whose personnel and revenue numbers fall below certain limits. The abbreviation "SME" is used by international organizations such as the World Bank, the OECD, European Union, the United Nations, and the World Trade Organization (WTO). In any given national economy, SMEs sometimes outnumber large companies by a wide margin and also employ many more people. For example, Australian SMEs makeup 98% of all Australian businesses, produce one third of the total GDP (gross domestic product) and employ 4.7 million people. In Chile, in the commercial year 2014, 98.5% of the firms were classified as SMEs. In Tunisia, the self employed workers alone account for about 28% of the total non farm employment, and firms with fewer than 100 employees account for about 62% of total employment. The United States' SMEs generate half of all U. S. jobs, but only 40% of GDP. Developing countries tend to have a larger share of small and medium sized enterprises. Although they create more new jobs than large firms, SMEs also suffer the majority of job destruction/contraction. According to the World Bank Group's 2021 FINDEX database, there is a $1.7 trillion funding gap for formal, women owned micro, small, and medium sized enterprises. Additionally, over 68% of small women owned firms lack access to finance.' Overview
SMEs are important for economic and social reasons, given the sector's role in employment. Due to their sizes, SMEs are heavily influenced by their Chief Executive Officer, a. k. a. CEOs. The CEOs of SMEs are often the founders, owners, and managers of the SMEs. The duties of the CEO in a SME mirror those of the CEO of a large company: the CEO needs to strategically allocate their time, energy, and assets to direct the SMEs. Typically, the CEO is the strategist, champion and leader for developing the SME or the prime reason for the business failing. At the employee level, Petrakis and Kostis (2012) explore the role of interpersonal trust and knowledge in the number of small and medium enterprises. They conclude that knowledge positively affects the number of SMEs, which in turn positively affects interpersonal trust. Note that the empirical results indicate that interpersonal trust does not affect the number of SMEs. Therefore, although knowledge development can reinforce SMEs, trust becomes widespread in a society when the number of SMEs is greater. Legal boundary on SMEs around the world
Multilateral organizations have been criticized for using one measure for all. The legal boundary of SMEs around the world vary, and below is a list of the upper limits of SMEs in some countries. Africa
African small businesses frequently struggle to get the cash they require to thrive. According to the SME Finance Forum, the formal financing gap for African SMEs averaged 17% of GDP across the 43 countries assessed in 2017. According to the World Bank, women own 58% of all MSMEs in Africa. The European Investment Bank's Banking in Africa survey, 2021 suggests that most of the responding banks had a non performing loan (NPL) ratio of at least 5%. NPLs account for at least 10% of the SME portfolio in approximately one third of African banks. Furthermore, 50% of the banks had at least 5% of their SME portfolio under the moratorium, and 40% had at least 5% of SME loans under some type of restructuring. Somalia
In Somalia, the term is SME (for "small, medium, and micro enterprises"); elsewhere in Africa, MSME stands for "micro, small, and medium enterprises". An SME is defined as a small business that has more than 30 employees but less than 250 employees. South Africa
In the National Small Business Amendment Act 2004, micro businesses in the different sectors, varying from the manufacturing to the retail sectors, are defined as businesses with five or fewer employees and a turnover of up to R100,000 ZAR ($6,900). Very small businesses employ between 6 and 20 employees, while small businesses employ between 21 and 50 employees. The upper limit for turnover in a small business varies from R1 million ($69,200) in the agricultural sector to R13 million ($899,800) in the catering, accommodations and other trade sectors as well as in the manufacturing sector, with a maximum of R32 million ($2,214,800) in the wholesale trade sector. Medium sized businesses''' usually employ up to 200 people (100 in the agricultural sector), and the maximum turnover varies from R5 million ($346,100) in the agricultural sector to R51 ($3,529,800) million in the manufacturing sector and R64 ($4,429,600) million in the wholesale trade, commercial agents and allied services sector. A comprehensive definition of an SME in South Africa is, therefore, an enterprise with one or more of the following characteristics:
Fewer than 200 employees,
Annual turnover of less than R64 million,
Capital assets of less than R10 million,
Direct managerial involvement by owners
Asia
SMEs account for nearly 90% of all company entities in developing Asian countries and are the principal private sector employers, supplying 50 80% of all jobs. SMEs cover 97 99% of all firms in South east Asia, contributing considerably to each country's GDP—for example, 46% in Singapore, 57% in Indonesia, and over 40% in other nations. 98% of business establishments in Hong Kong are defined as SMEs and employed 45% of the work force. India
India defines Micro, Small and Medium Enterprises based on dual criteria of investment and turnover. This definition is provided in Section 7 of Micro, Small & Medium Enterprises Development Act, 2006 (MSMED Act) and was notified in September 2006. The Act provides for the classification of enterprises based on their investment size and the nature of the activity undertaken by that enterprise. As per MSMED Act, enterprises are classified into two categories manufacturing enterprises and service enterprises. For each of these categories, a definition is given to explain what constitutes a micro enterprise or a small enterprise or a medium enterprise. If an enterprise does not fall under the above categories, it would be considered a large scale enterprise. In June 2020, India updated the definition as follows:
+Sr NoClassificationCriteria (in ₹)1Micro EnterprisesInvestment <= 1 cr and Turnover <= 5 cr2Small EnterprisesInvestment <= 10 cr and Turnover <= 50 cr3Medium EnterprisesInvestment <= 50 cr and Turnover <= 250 cr
Businesses that are declared as MSMEs and within specific sectors and criteria can then apply for "priority sector" lending to help with business expenses; banks have annual targets set by the Prime Minister's Task Force on MSMEs for year on year increases of lending to various categories of MSMEs. MSME is considered a key contributor to India's growth and contributes 48% to India's total export. Indonesia
In Indonesia, the government defines micro, small, and medium enterprises (Indonesian: usaha mikro kecil menengah, UMKM) based on their assets and revenues according to Law No. 20/2008:
Type Maximum assets, Rp Gross Revenue, Rp Number of Employee Statistics Indonesia Micro maximum 50,000,000 maximum 300,000,000 1 4 Small 50,000,000 500,000,000 300,000,000 2,500,000,000 5 9 Medium 500,000,000 10,000,000,000 2,500,000,000 50,000,000,000 20 99 Large >10,000,000,000 >50,000,000,000 >99
An annual revenue of Rp 50 billion is approximately equal to US$3.1 million as of April 2024. Despite their significant contribution to GDP and job creation, Indonesian MSMEs confront a number of obstacles. One of the most significant is capital access: 60 70 percent of MSMEs lack access to financial institutions and their funding options. Other restrictions include inadequate infrastructure, difficulties acquiring company licences and permissions, high tax rates, political insecurity, and improving their brand image in the digital era. 21st century businesses strategically use both their websites and social media in order to advertise their products and control their branding. Quality content on both information streams will positively affect branding and attract customers. The People's Business Credit (Kredit Usaha Rakyat, or KUR [id]) was established in 2007 by President Yudhoyono to extend credit to businesses that were considered "feasible but not bankable". Bank Rakyat Indonesia conducts more than half of KUR lending nationwide. In Jakarta, the capital city of Indonesia, 529 MSMEs with the potential to be funded have been identified by Bank Indonesia. Economy Sector Number of Companies Processing Industry 151 Health Services and Social Activities 1 Rental leasing services without option rights, employment, travel agents and other business support 9 Professional, Scientific And Technical Services 11 Other Service Activities 21 Arts, Entertainment And Recreation 1 Construction 2 Water Procurement, Waste Management And Recycling, Waste And Garbage Disposal And Cleaning 1 Provision of Accommodation and Provision of Food and Drink 80 Wholesale and retail trade of car and motorcycle repair and maintenance 236 Agriculture, Forestry, and Fisheries 16
Philippines
According to the Department of Trade and Industry's 2020 List of Establishments report, there are 957,620 registered business enterprises operating in the country, composed of 99.51% MSMEs and 0.49% large firms. The MSMEs consist of 88.77% microenterprises, 10.25% small enterprises, and 0.49% medium enterprises. Among the top industry sectors include (1) wholesale and retail trade; repair of motor vehicles and motorcycles (445,386); (2) accommodation and food service activities (134,046); (3) manufacturing (110,916); (4) other service activities (62,376); and (5) financial and insurance activities (45,558) which accounted for about 83.77% of the total number of MSME establishments. Prior to the pandemic, MSMEs generated more than 5.38 million jobs or 62.66% of the country's total employment with a 29.38% share from micro enterprises followed by 25.78% and 7.50% for small and medium enterprises. Europe
European Union
Small companies are important to the European economy as they account for 99.8% of non financial enterprises in the European Union (EU) and employ two thirds of the workforce in the EU. The majority of European firms are small and medium sized enterprises (SMEs), employing over 100 million people. Due to the COVID 19 pandemic, a large majority of SMEs saw a decline in revenue during 2020 2021. Medium sized businesses (or mid caps) play an important role in the European economy, accounting for a considerable part of employment and wealth production. According to a recent European Commission analysis, mid cap companies (250 3000 people) make up about 17% of total employment and 21% of turnover in the EU27 business sector. Micro firms (with fewer than nine employees) employ 38% of the total workforce, while SMEs with fewer than 250 employees account for 34.4%. Larger (XL) firms with 3,000 or more employees account for 10.1% of overall employment in EU business sectors. According to Eurostat SBS statistics, in 2021, tiny enterprises (0 9 workers) and SMEs (excluding micro firms) employed around 30% and 34.5% of the entire workforce in EU27 business sectors, while bigger firms (250+ employees) contributed for 36.4% of overall employment. The pandemic has had a greater impact on SMEs than on large businesses, with an average sales loss of 26% versus 23% for large businesses. Government assistance appears to have benefited SMEs more than large corporations among the companies that do have overdraft facilities, indicating a successful application of policies to ease financial limitations for SMEs even when they receive help from the banking sector. The EIB Group contributed more than €16.35 billion to small and medium sized firms in 2022. SMEs were more quick in altering output during the pandemic, despite the intensity of the shock. In reaction to the crisis, one third of major enterprises altered their output or services, compared to 37% of SMEs. The criteria for defining the size of a business differ from country to country, with many countries having programs of business rate reduction and financial subsidy for SMEs. According to the European Commission, SMEs are enterprises which meet the following definition of staff headcount and either the turnover or balance sheet total definitions:
Company category Staff headcount Turnover Balance sheet total Medium sized < 250 ≤ €50 million ≤ €43 million Small < 50 ≤ €10 million ≤ €10 million Micro < 10 ≤ €2 million ≤ €2 million
In July 2011, the European Commission said it would open a consultation on the definition of SMEs in 2012. A consultation document was issued on 6 February 2018 and the consultation period closed on 6 May 2018. as of November 2019, no conclusions or responses have yet emerged. In Europe, there are three broad parameters that define SMEs:
Micro enterprises have up to 10 employees
Small enterprises have up to 50 employees
Medium sized enterprises have up to 250 employees. The European definition of SME follows: "The category of micro, small and medium sized enterprises (SMEs) is made up of enterprises which employ fewer than 250 persons and which have an annual turnover not exceeding 50 million euro, and/or an annual balance sheet total not exceeding 43 million euro." In order to prepare for an evaluation and revision of some features of the small and medium sized enterprises definition European Union established public consultation period from 6 February 2018 to 6 May 2018. Public consultation is available for all EU member country citizens and organizations. Especially, national and regional authorities, enterprises, business associations or organizations, venture capital providers, research and academic institutions, and individual citizens are expected as the main contributors. EU member states have had individual definitions of what constitutes an SME. For example, the definition in Germany had a limit of 255 employees, while in Belgium it could have been 100. The result is that while a Belgian business of 249 employees would be taxed at full rate in Belgium, it would nevertheless be eligible for SME subsidy under a European labelled programme. SMEs are a crucial element in the supplier network of large enterprises which are already on their way towards Industry 4.0. According to German economist Hans Heinrich Bass, "empirical research on SME as well as policies to promote SME have a long tradition in [West] Germany, dating back into the 19th century. Until the mid 20th century, most researchers considered SME as an impediment to further economic development and SME policies were thus designed in the framework of social policies. Only the Ordoliberalism school, the founding fathers of Germany's social market economy, discovered their strengths, considered SME as a solution to mid 20th century economic problems (mass unemployment, abuse of economic power), and laid the foundations for non selective (functional) industrial policies to promote SMEs." Only around 20% of European SMEs are substantially digitalized, compared to almost 50% of major businesses. Small and medium sized companies make up 56.2% of the non financial sector. Smaller companies account for more than 60% of the value contributed to the non financial sector in Belgium, Italy, and Spain, three of the nations worst hit by the COVID 19 pandemic. An estimated 50% of Europe's small firms may fail because they lack the substantial financial reserves required to weather the crisis. With around 338,000 functioning in Bulgaria in 2022, SMEs and mid caps are major contributors in the Bulgarian economy. They also employ over 75% of the workforce and create 65% of the economy's added value. The results of an EU survey conducted in 2021 suggest that during the pandemic, in countries with larger fiscal packages, SMEs were on average more likely to experience bankruptcy even after controlling for the size of the shock, the use of bank financing, and country and sector fixed effects. When policy assistance rises by 1% of GDP, the probabilities of bankruptcy for a SME are 2.7 times higher than for a non SME. Credit limitations are especially difficult for SMEs and new businesses to overcome. Credit constraints affect 24% of SMEs and 27% of young businesses. Poland
The SME sector in Poland generates almost 50% of the GDP, and out of that, for instance, in 2011, micro companies generated 29.6%, small companies 7.7%, and medium companies 10.4% (big companies 24.0%; other entities 16.5%, and revenues from customs duties and taxes generated 11.9%). In 2011, out of the total of 1,784,603 entities operating in Poland, merely 3,189 were classified as "large", so 1,781,414 were micro, small, or medium. SMEs employed 6.3 million people out of the total of 9.0 million of labour employed in the private sector. In Poland in 2011 there were 36.2 SMEs per 1,000 inhabitants. Nearly seven million people are employed by small businesses in Poland, which accounts for around half of the country's GDP, yet smaller businesses are less likely than larger ones to invest in strategies to combat climate change or boost energy efficiency. In October 2021, the Bank Ochrony rodowiska, a Polish bank that specializes in funding environmental protection initiatives received €75 million from the European Investment Bank (EIB) for these small enterprises. The Polish bank wants to use at least 50% of the loan for initiatives with a clear emphasis on tackling climate change, such improving building energy efficiency or turning to renewable energy sources like solar power. The money is set to be distributed across Poland, with around 80% of it projected to go to cohesive regions. Very small companies are called in the UK micro entities, which have simpler financial reporting requirements. Such micro enterprises must meet any two of the following criteria: balance sheet £316,000 or less; turnover £632,000 or less; employees 10 or less. Many small and medium sized businesses form part of the UK's currently growing Mittelstand, or Brittelstand'' as it is also sometimes named. These are businesses in Britain that are not only small or medium but also have a much broader set of values and more elastic definition. The Department for Business Innovation and Skills estimated that at the start of 2014, 99.3% of UK private sector businesses were SMEs, with their £1.6 trillion annual turnover accounting for 47% of private sector turnover. In order to support SMEs, the UK government set a target in 2010 "that 25% of government’s spend, either directly or in supply chains, goes to SMEs by 2015"; it achieved this by 2013.
МСП важны по экономическим и социальным причинам, учитывая их роль в обеспечении занятости. В силу своих размеров на МСП оказывает значительное влияние генеральный директор (CEO), или главный исполнительный директор. Генеральные директора МСП часто являются основателями, владельцами и менеджерами МСП. Обязанности генерального директора в МСП соответствуют обязанностям генерального директора крупной компании: генеральный директор должен стратегически распределять свое время, энергию и ресурсы для управления МСП. Как правило, генеральный директор является стратегом, лидером и защитником развития МСП или основной причиной неудачи бизнеса. На уровне сотрудников Петракис и Костис (2012) исследуют роль межличностного доверия и знаний в количестве малых и средних предприятий. Они пришли к выводу, что знания положительно влияют на количество МСП, что, в свою очередь, положительно влияет на межличностное доверие. Следует отметить, что эмпирические результаты показывают, что межличностное доверие не влияет на количество МСП. Следовательно, хотя развитие знаний может укрепить МСП, доверие распространяется в обществе, когда количество МСП больше. Правовые границы для МСП во всем мире.
Type of business with small personnel numbers
Small and medium sized enterprises (SMEs) or small and medium sized businesses (SMBs) are businesses whose personnel and revenue numbers fall below certain limits. The abbreviation "SME" is used by international organizations such as the World Bank, the OECD, European Union, the United Nations, and the World Trade Organization (WTO). In any given national economy, SMEs sometimes outnumber large companies by a wide margin and also employ many more people. For example, Australian SMEs makeup 98% of all Australian businesses, produce one third of the total GDP (gross domestic product) and employ 4.7 million people. In Chile, in the commercial year 2014, 98.5% of the firms were classified as SMEs. In Tunisia, the self employed workers alone account for about 28% of the total non farm employment, and firms with fewer than 100 employees account for about 62% of total employment. The United States' SMEs generate half of all U. S. jobs, but only 40% of GDP. Developing countries tend to have a larger share of small and medium sized enterprises. Although they create more new jobs than large firms, SMEs also suffer the majority of job destruction/contraction. According to the World Bank Group's 2021 FINDEX database, there is a $1.7 trillion funding gap for formal, women owned micro, small, and medium sized enterprises. Additionally, over 68% of small women owned firms lack access to finance.' Overview
SMEs are important for economic and social reasons, given the sector's role in employment. Due to their sizes, SMEs are heavily influenced by their Chief Executive Officer, a. k. a. CEOs. The CEOs of SMEs are often the founders, owners, and managers of the SMEs. The duties of the CEO in a SME mirror those of the CEO of a large company: the CEO needs to strategically allocate their time, energy, and assets to direct the SMEs. Typically, the CEO is the strategist, champion and leader for developing the SME or the prime reason for the business failing. At the employee level, Petrakis and Kostis (2012) explore the role of interpersonal trust and knowledge in the number of small and medium enterprises. They conclude that knowledge positively affects the number of SMEs, which in turn positively affects interpersonal trust. Note that the empirical results indicate that interpersonal trust does not affect the number of SMEs. Therefore, although knowledge development can reinforce SMEs, trust becomes widespread in a society when the number of SMEs is greater. Legal boundary on SMEs around the world
Multilateral organizations have been criticized for using one measure for all. The legal boundary of SMEs around the world vary, and below is a list of the upper limits of SMEs in some countries. Africa
African small businesses frequently struggle to get the cash they require to thrive. According to the SME Finance Forum, the formal financing gap for African SMEs averaged 17% of GDP across the 43 countries assessed in 2017. According to the World Bank, women own 58% of all MSMEs in Africa. The European Investment Bank's Banking in Africa survey, 2021 suggests that most of the responding banks had a non performing loan (NPL) ratio of at least 5%. NPLs account for at least 10% of the SME portfolio in approximately one third of African banks. Furthermore, 50% of the banks had at least 5% of their SME portfolio under the moratorium, and 40% had at least 5% of SME loans under some type of restructuring. Somalia
In Somalia, the term is SME (for "small, medium, and micro enterprises"); elsewhere in Africa, MSME stands for "micro, small, and medium enterprises". An SME is defined as a small business that has more than 30 employees but less than 250 employees. South Africa
In the National Small Business Amendment Act 2004, micro businesses in the different sectors, varying from the manufacturing to the retail sectors, are defined as businesses with five or fewer employees and a turnover of up to R100,000 ZAR ($6,900). Very small businesses employ between 6 and 20 employees, while small businesses employ between 21 and 50 employees. The upper limit for turnover in a small business varies from R1 million ($69,200) in the agricultural sector to R13 million ($899,800) in the catering, accommodations and other trade sectors as well as in the manufacturing sector, with a maximum of R32 million ($2,214,800) in the wholesale trade sector. Medium sized businesses''' usually employ up to 200 people (100 in the agricultural sector), and the maximum turnover varies from R5 million ($346,100) in the agricultural sector to R51 ($3,529,800) million in the manufacturing sector and R64 ($4,429,600) million in the wholesale trade, commercial agents and allied services sector. A comprehensive definition of an SME in South Africa is, therefore, an enterprise with one or more of the following characteristics:
Fewer than 200 employees,
Annual turnover of less than R64 million,
Capital assets of less than R10 million,
Direct managerial involvement by owners
Asia
SMEs account for nearly 90% of all company entities in developing Asian countries and are the principal private sector employers, supplying 50 80% of all jobs. SMEs cover 97 99% of all firms in South east Asia, contributing considerably to each country's GDP—for example, 46% in Singapore, 57% in Indonesia, and over 40% in other nations. 98% of business establishments in Hong Kong are defined as SMEs and employed 45% of the work force. India
India defines Micro, Small and Medium Enterprises based on dual criteria of investment and turnover. This definition is provided in Section 7 of Micro, Small & Medium Enterprises Development Act, 2006 (MSMED Act) and was notified in September 2006. The Act provides for the classification of enterprises based on their investment size and the nature of the activity undertaken by that enterprise. As per MSMED Act, enterprises are classified into two categories manufacturing enterprises and service enterprises. For each of these categories, a definition is given to explain what constitutes a micro enterprise or a small enterprise or a medium enterprise. If an enterprise does not fall under the above categories, it would be considered a large scale enterprise. In June 2020, India updated the definition as follows:
+Sr NoClassificationCriteria (in ₹)1Micro EnterprisesInvestment <= 1 cr and Turnover <= 5 cr2Small EnterprisesInvestment <= 10 cr and Turnover <= 50 cr3Medium EnterprisesInvestment <= 50 cr and Turnover <= 250 cr
Businesses that are declared as MSMEs and within specific sectors and criteria can then apply for "priority sector" lending to help with business expenses; banks have annual targets set by the Prime Minister's Task Force on MSMEs for year on year increases of lending to various categories of MSMEs. MSME is considered a key contributor to India's growth and contributes 48% to India's total export. Indonesia
In Indonesia, the government defines micro, small, and medium enterprises (Indonesian: usaha mikro kecil menengah, UMKM) based on their assets and revenues according to Law No. 20/2008:
Type Maximum assets, Rp Gross Revenue, Rp Number of Employee Statistics Indonesia Micro maximum 50,000,000 maximum 300,000,000 1 4 Small 50,000,000 500,000,000 300,000,000 2,500,000,000 5 9 Medium 500,000,000 10,000,000,000 2,500,000,000 50,000,000,000 20 99 Large >10,000,000,000 >50,000,000,000 >99
An annual revenue of Rp 50 billion is approximately equal to US$3.1 million as of April 2024. Despite their significant contribution to GDP and job creation, Indonesian MSMEs confront a number of obstacles. One of the most significant is capital access: 60 70 percent of MSMEs lack access to financial institutions and their funding options. Other restrictions include inadequate infrastructure, difficulties acquiring company licences and permissions, high tax rates, political insecurity, and improving their brand image in the digital era. 21st century businesses strategically use both their websites and social media in order to advertise their products and control their branding. Quality content on both information streams will positively affect branding and attract customers. The People's Business Credit (Kredit Usaha Rakyat, or KUR [id]) was established in 2007 by President Yudhoyono to extend credit to businesses that were considered "feasible but not bankable". Bank Rakyat Indonesia conducts more than half of KUR lending nationwide. In Jakarta, the capital city of Indonesia, 529 MSMEs with the potential to be funded have been identified by Bank Indonesia. Economy Sector Number of Companies Processing Industry 151 Health Services and Social Activities 1 Rental leasing services without option rights, employment, travel agents and other business support 9 Professional, Scientific And Technical Services 11 Other Service Activities 21 Arts, Entertainment And Recreation 1 Construction 2 Water Procurement, Waste Management And Recycling, Waste And Garbage Disposal And Cleaning 1 Provision of Accommodation and Provision of Food and Drink 80 Wholesale and retail trade of car and motorcycle repair and maintenance 236 Agriculture, Forestry, and Fisheries 16
Philippines
According to the Department of Trade and Industry's 2020 List of Establishments report, there are 957,620 registered business enterprises operating in the country, composed of 99.51% MSMEs and 0.49% large firms. The MSMEs consist of 88.77% microenterprises, 10.25% small enterprises, and 0.49% medium enterprises. Among the top industry sectors include (1) wholesale and retail trade; repair of motor vehicles and motorcycles (445,386); (2) accommodation and food service activities (134,046); (3) manufacturing (110,916); (4) other service activities (62,376); and (5) financial and insurance activities (45,558) which accounted for about 83.77% of the total number of MSME establishments. Prior to the pandemic, MSMEs generated more than 5.38 million jobs or 62.66% of the country's total employment with a 29.38% share from micro enterprises followed by 25.78% and 7.50% for small and medium enterprises. Europe
European Union
Small companies are important to the European economy as they account for 99.8% of non financial enterprises in the European Union (EU) and employ two thirds of the workforce in the EU. The majority of European firms are small and medium sized enterprises (SMEs), employing over 100 million people. Due to the COVID 19 pandemic, a large majority of SMEs saw a decline in revenue during 2020 2021. Medium sized businesses (or mid caps) play an important role in the European economy, accounting for a considerable part of employment and wealth production. According to a recent European Commission analysis, mid cap companies (250 3000 people) make up about 17% of total employment and 21% of turnover in the EU27 business sector. Micro firms (with fewer than nine employees) employ 38% of the total workforce, while SMEs with fewer than 250 employees account for 34.4%. Larger (XL) firms with 3,000 or more employees account for 10.1% of overall employment in EU business sectors. According to Eurostat SBS statistics, in 2021, tiny enterprises (0 9 workers) and SMEs (excluding micro firms) employed around 30% and 34.5% of the entire workforce in EU27 business sectors, while bigger firms (250+ employees) contributed for 36.4% of overall employment. The pandemic has had a greater impact on SMEs than on large businesses, with an average sales loss of 26% versus 23% for large businesses. Government assistance appears to have benefited SMEs more than large corporations among the companies that do have overdraft facilities, indicating a successful application of policies to ease financial limitations for SMEs even when they receive help from the banking sector. The EIB Group contributed more than €16.35 billion to small and medium sized firms in 2022. SMEs were more quick in altering output during the pandemic, despite the intensity of the shock. In reaction to the crisis, one third of major enterprises altered their output or services, compared to 37% of SMEs. The criteria for defining the size of a business differ from country to country, with many countries having programs of business rate reduction and financial subsidy for SMEs. According to the European Commission, SMEs are enterprises which meet the following definition of staff headcount and either the turnover or balance sheet total definitions:
Company category Staff headcount Turnover Balance sheet total Medium sized < 250 ≤ €50 million ≤ €43 million Small < 50 ≤ €10 million ≤ €10 million Micro < 10 ≤ €2 million ≤ €2 million
In July 2011, the European Commission said it would open a consultation on the definition of SMEs in 2012. A consultation document was issued on 6 February 2018 and the consultation period closed on 6 May 2018. as of November 2019, no conclusions or responses have yet emerged. In Europe, there are three broad parameters that define SMEs:
Micro enterprises have up to 10 employees
Small enterprises have up to 50 employees
Medium sized enterprises have up to 250 employees. The European definition of SME follows: "The category of micro, small and medium sized enterprises (SMEs) is made up of enterprises which employ fewer than 250 persons and which have an annual turnover not exceeding 50 million euro, and/or an annual balance sheet total not exceeding 43 million euro." In order to prepare for an evaluation and revision of some features of the small and medium sized enterprises definition European Union established public consultation period from 6 February 2018 to 6 May 2018. Public consultation is available for all EU member country citizens and organizations. Especially, national and regional authorities, enterprises, business associations or organizations, venture capital providers, research and academic institutions, and individual citizens are expected as the main contributors. EU member states have had individual definitions of what constitutes an SME. For example, the definition in Germany had a limit of 255 employees, while in Belgium it could have been 100. The result is that while a Belgian business of 249 employees would be taxed at full rate in Belgium, it would nevertheless be eligible for SME subsidy under a European labelled programme. SMEs are a crucial element in the supplier network of large enterprises which are already on their way towards Industry 4.0. According to German economist Hans Heinrich Bass, "empirical research on SME as well as policies to promote SME have a long tradition in [West] Germany, dating back into the 19th century. Until the mid 20th century, most researchers considered SME as an impediment to further economic development and SME policies were thus designed in the framework of social policies. Only the Ordoliberalism school, the founding fathers of Germany's social market economy, discovered their strengths, considered SME as a solution to mid 20th century economic problems (mass unemployment, abuse of economic power), and laid the foundations for non selective (functional) industrial policies to promote SMEs." Only around 20% of European SMEs are substantially digitalized, compared to almost 50% of major businesses. Small and medium sized companies make up 56.2% of the non financial sector. Smaller companies account for more than 60% of the value contributed to the non financial sector in Belgium, Italy, and Spain, three of the nations worst hit by the COVID 19 pandemic. An estimated 50% of Europe's small firms may fail because they lack the substantial financial reserves required to weather the crisis. With around 338,000 functioning in Bulgaria in 2022, SMEs and mid caps are major contributors in the Bulgarian economy. They also employ over 75% of the workforce and create 65% of the economy's added value. The results of an EU survey conducted in 2021 suggest that during the pandemic, in countries with larger fiscal packages, SMEs were on average more likely to experience bankruptcy even after controlling for the size of the shock, the use of bank financing, and country and sector fixed effects. When policy assistance rises by 1% of GDP, the probabilities of bankruptcy for a SME are 2.7 times higher than for a non SME. Credit limitations are especially difficult for SMEs and new businesses to overcome. Credit constraints affect 24% of SMEs and 27% of young businesses. Poland
The SME sector in Poland generates almost 50% of the GDP, and out of that, for instance, in 2011, micro companies generated 29.6%, small companies 7.7%, and medium companies 10.4% (big companies 24.0%; other entities 16.5%, and revenues from customs duties and taxes generated 11.9%). In 2011, out of the total of 1,784,603 entities operating in Poland, merely 3,189 were classified as "large", so 1,781,414 were micro, small, or medium. SMEs employed 6.3 million people out of the total of 9.0 million of labour employed in the private sector. In Poland in 2011 there were 36.2 SMEs per 1,000 inhabitants. Nearly seven million people are employed by small businesses in Poland, which accounts for around half of the country's GDP, yet smaller businesses are less likely than larger ones to invest in strategies to combat climate change or boost energy efficiency. In October 2021, the Bank Ochrony rodowiska, a Polish bank that specializes in funding environmental protection initiatives received €75 million from the European Investment Bank (EIB) for these small enterprises. The Polish bank wants to use at least 50% of the loan for initiatives with a clear emphasis on tackling climate change, such improving building energy efficiency or turning to renewable energy sources like solar power. The money is set to be distributed across Poland, with around 80% of it projected to go to cohesive regions. Very small companies are called in the UK micro entities, which have simpler financial reporting requirements. Such micro enterprises must meet any two of the following criteria: balance sheet £316,000 or less; turnover £632,000 or less; employees 10 or less. Many small and medium sized businesses form part of the UK's currently growing Mittelstand, or Brittelstand'' as it is also sometimes named. These are businesses in Britain that are not only small or medium but also have a much broader set of values and more elastic definition. The Department for Business Innovation and Skills estimated that at the start of 2014, 99.3% of UK private sector businesses were SMEs, with their £1.6 trillion annual turnover accounting for 47% of private sector turnover. In order to support SMEs, the UK government set a target in 2010 "that 25% of government’s spend, either directly or in supply chains, goes to SMEs by 2015"; it achieved this by 2013.
Small and medium sized enterprises (SMEs) or small and medium sized businesses (SMBs) are businesses whose personnel and revenue numbers fall below certain limits. The abbreviation "SME" is used by international organizations such as the World Bank, the OECD, European Union, the United Nations, and the World Trade Organization (WTO). In any given national economy, SMEs sometimes outnumber large companies by a wide margin and also employ many more people. For example, Australian SMEs makeup 98% of all Australian businesses, produce one third of the total GDP (gross domestic product) and employ 4.7 million people. In Chile, in the commercial year 2014, 98.5% of the firms were classified as SMEs. In Tunisia, the self employed workers alone account for about 28% of the total non farm employment, and firms with fewer than 100 employees account for about 62% of total employment. The United States' SMEs generate half of all U. S. jobs, but only 40% of GDP. Developing countries tend to have a larger share of small and medium sized enterprises. Although they create more new jobs than large firms, SMEs also suffer the majority of job destruction/contraction. According to the World Bank Group's 2021 FINDEX database, there is a $1.7 trillion funding gap for formal, women owned micro, small, and medium sized enterprises. Additionally, over 68% of small women owned firms lack access to finance.' Overview
SMEs are important for economic and social reasons, given the sector's role in employment. Due to their sizes, SMEs are heavily influenced by their Chief Executive Officer, a. k. a. CEOs. The CEOs of SMEs are often the founders, owners, and managers of the SMEs. The duties of the CEO in a SME mirror those of the CEO of a large company: the CEO needs to strategically allocate their time, energy, and assets to direct the SMEs. Typically, the CEO is the strategist, champion and leader for developing the SME or the prime reason for the business failing. At the employee level, Petrakis and Kostis (2012) explore the role of interpersonal trust and knowledge in the number of small and medium enterprises. They conclude that knowledge positively affects the number of SMEs, which in turn positively affects interpersonal trust. Note that the empirical results indicate that interpersonal trust does not affect the number of SMEs. Therefore, although knowledge development can reinforce SMEs, trust becomes widespread in a society when the number of SMEs is greater. Legal boundary on SMEs around the world
Multilateral organizations have been criticized for using one measure for all. The legal boundary of SMEs around the world vary, and below is a list of the upper limits of SMEs in some countries. Africa
African small businesses frequently struggle to get the cash they require to thrive. According to the SME Finance Forum, the formal financing gap for African SMEs averaged 17% of GDP across the 43 countries assessed in 2017. According to the World Bank, women own 58% of all MSMEs in Africa. The European Investment Bank's Banking in Africa survey, 2021 suggests that most of the responding banks had a non performing loan (NPL) ratio of at least 5%. NPLs account for at least 10% of the SME portfolio in approximately one third of African banks. Furthermore, 50% of the banks had at least 5% of their SME portfolio under the moratorium, and 40% had at least 5% of SME loans under some type of restructuring. Somalia
In Somalia, the term is SME (for "small, medium, and micro enterprises"); elsewhere in Africa, MSME stands for "micro, small, and medium enterprises". An SME is defined as a small business that has more than 30 employees but less than 250 employees. South Africa
In the National Small Business Amendment Act 2004, micro businesses in the different sectors, varying from the manufacturing to the retail sectors, are defined as businesses with five or fewer employees and a turnover of up to R100,000 ZAR ($6,900). Very small businesses employ between 6 and 20 employees, while small businesses employ between 21 and 50 employees. The upper limit for turnover in a small business varies from R1 million ($69,200) in the agricultural sector to R13 million ($899,800) in the catering, accommodations and other trade sectors as well as in the manufacturing sector, with a maximum of R32 million ($2,214,800) in the wholesale trade sector. Medium sized businesses''' usually employ up to 200 people (100 in the agricultural sector), and the maximum turnover varies from R5 million ($346,100) in the agricultural sector to R51 ($3,529,800) million in the manufacturing sector and R64 ($4,429,600) million in the wholesale trade, commercial agents and allied services sector. A comprehensive definition of an SME in South Africa is, therefore, an enterprise with one or more of the following characteristics:
Fewer than 200 employees,
Annual turnover of less than R64 million,
Capital assets of less than R10 million,
Direct managerial involvement by owners
Asia
SMEs account for nearly 90% of all company entities in developing Asian countries and are the principal private sector employers, supplying 50 80% of all jobs. SMEs cover 97 99% of all firms in South east Asia, contributing considerably to each country's GDP—for example, 46% in Singapore, 57% in Indonesia, and over 40% in other nations. 98% of business establishments in Hong Kong are defined as SMEs and employed 45% of the work force. India
India defines Micro, Small and Medium Enterprises based on dual criteria of investment and turnover. This definition is provided in Section 7 of Micro, Small & Medium Enterprises Development Act, 2006 (MSMED Act) and was notified in September 2006. The Act provides for the classification of enterprises based on their investment size and the nature of the activity undertaken by that enterprise. As per MSMED Act, enterprises are classified into two categories manufacturing enterprises and service enterprises. For each of these categories, a definition is given to explain what constitutes a micro enterprise or a small enterprise or a medium enterprise. If an enterprise does not fall under the above categories, it would be considered a large scale enterprise. In June 2020, India updated the definition as follows:
+Sr NoClassificationCriteria (in ₹)1Micro EnterprisesInvestment <= 1 cr and Turnover <= 5 cr2Small EnterprisesInvestment <= 10 cr and Turnover <= 50 cr3Medium EnterprisesInvestment <= 50 cr and Turnover <= 250 cr
Businesses that are declared as MSMEs and within specific sectors and criteria can then apply for "priority sector" lending to help with business expenses; banks have annual targets set by the Prime Minister's Task Force on MSMEs for year on year increases of lending to various categories of MSMEs. MSME is considered a key contributor to India's growth and contributes 48% to India's total export. Indonesia
In Indonesia, the government defines micro, small, and medium enterprises (Indonesian: usaha mikro kecil menengah, UMKM) based on their assets and revenues according to Law No. 20/2008:
Type Maximum assets, Rp Gross Revenue, Rp Number of Employee Statistics Indonesia Micro maximum 50,000,000 maximum 300,000,000 1 4 Small 50,000,000 500,000,000 300,000,000 2,500,000,000 5 9 Medium 500,000,000 10,000,000,000 2,500,000,000 50,000,000,000 20 99 Large >10,000,000,000 >50,000,000,000 >99
An annual revenue of Rp 50 billion is approximately equal to US$3.1 million as of April 2024. Despite their significant contribution to GDP and job creation, Indonesian MSMEs confront a number of obstacles. One of the most significant is capital access: 60 70 percent of MSMEs lack access to financial institutions and their funding options. Other restrictions include inadequate infrastructure, difficulties acquiring company licences and permissions, high tax rates, political insecurity, and improving their brand image in the digital era. 21st century businesses strategically use both their websites and social media in order to advertise their products and control their branding. Quality content on both information streams will positively affect branding and attract customers. The People's Business Credit (Kredit Usaha Rakyat, or KUR [id]) was established in 2007 by President Yudhoyono to extend credit to businesses that were considered "feasible but not bankable". Bank Rakyat Indonesia conducts more than half of KUR lending nationwide. In Jakarta, the capital city of Indonesia, 529 MSMEs with the potential to be funded have been identified by Bank Indonesia. Economy Sector Number of Companies Processing Industry 151 Health Services and Social Activities 1 Rental leasing services without option rights, employment, travel agents and other business support 9 Professional, Scientific And Technical Services 11 Other Service Activities 21 Arts, Entertainment And Recreation 1 Construction 2 Water Procurement, Waste Management And Recycling, Waste And Garbage Disposal And Cleaning 1 Provision of Accommodation and Provision of Food and Drink 80 Wholesale and retail trade of car and motorcycle repair and maintenance 236 Agriculture, Forestry, and Fisheries 16
Philippines
According to the Department of Trade and Industry's 2020 List of Establishments report, there are 957,620 registered business enterprises operating in the country, composed of 99.51% MSMEs and 0.49% large firms. The MSMEs consist of 88.77% microenterprises, 10.25% small enterprises, and 0.49% medium enterprises. Among the top industry sectors include (1) wholesale and retail trade; repair of motor vehicles and motorcycles (445,386); (2) accommodation and food service activities (134,046); (3) manufacturing (110,916); (4) other service activities (62,376); and (5) financial and insurance activities (45,558) which accounted for about 83.77% of the total number of MSME establishments. Prior to the pandemic, MSMEs generated more than 5.38 million jobs or 62.66% of the country's total employment with a 29.38% share from micro enterprises followed by 25.78% and 7.50% for small and medium enterprises. Europe
European Union
Small companies are important to the European economy as they account for 99.8% of non financial enterprises in the European Union (EU) and employ two thirds of the workforce in the EU. The majority of European firms are small and medium sized enterprises (SMEs), employing over 100 million people. Due to the COVID 19 pandemic, a large majority of SMEs saw a decline in revenue during 2020 2021. Medium sized businesses (or mid caps) play an important role in the European economy, accounting for a considerable part of employment and wealth production. According to a recent European Commission analysis, mid cap companies (250 3000 people) make up about 17% of total employment and 21% of turnover in the EU27 business sector. Micro firms (with fewer than nine employees) employ 38% of the total workforce, while SMEs with fewer than 250 employees account for 34.4%. Larger (XL) firms with 3,000 or more employees account for 10.1% of overall employment in EU business sectors. According to Eurostat SBS statistics, in 2021, tiny enterprises (0 9 workers) and SMEs (excluding micro firms) employed around 30% and 34.5% of the entire workforce in EU27 business sectors, while bigger firms (250+ employees) contributed for 36.4% of overall employment. The pandemic has had a greater impact on SMEs than on large businesses, with an average sales loss of 26% versus 23% for large businesses. Government assistance appears to have benefited SMEs more than large corporations among the companies that do have overdraft facilities, indicating a successful application of policies to ease financial limitations for SMEs even when they receive help from the banking sector. The EIB Group contributed more than €16.35 billion to small and medium sized firms in 2022. SMEs were more quick in altering output during the pandemic, despite the intensity of the shock. In reaction to the crisis, one third of major enterprises altered their output or services, compared to 37% of SMEs. The criteria for defining the size of a business differ from country to country, with many countries having programs of business rate reduction and financial subsidy for SMEs. According to the European Commission, SMEs are enterprises which meet the following definition of staff headcount and either the turnover or balance sheet total definitions:
Company category Staff headcount Turnover Balance sheet total Medium sized < 250 ≤ €50 million ≤ €43 million Small < 50 ≤ €10 million ≤ €10 million Micro < 10 ≤ €2 million ≤ €2 million
In July 2011, the European Commission said it would open a consultation on the definition of SMEs in 2012. A consultation document was issued on 6 February 2018 and the consultation period closed on 6 May 2018. as of November 2019, no conclusions or responses have yet emerged. In Europe, there are three broad parameters that define SMEs:
Micro enterprises have up to 10 employees
Small enterprises have up to 50 employees
Medium sized enterprises have up to 250 employees. The European definition of SME follows: "The category of micro, small and medium sized enterprises (SMEs) is made up of enterprises which employ fewer than 250 persons and which have an annual turnover not exceeding 50 million euro, and/or an annual balance sheet total not exceeding 43 million euro." In order to prepare for an evaluation and revision of some features of the small and medium sized enterprises definition European Union established public consultation period from 6 February 2018 to 6 May 2018. Public consultation is available for all EU member country citizens and organizations. Especially, national and regional authorities, enterprises, business associations or organizations, venture capital providers, research and academic institutions, and individual citizens are expected as the main contributors. EU member states have had individual definitions of what constitutes an SME. For example, the definition in Germany had a limit of 255 employees, while in Belgium it could have been 100. The result is that while a Belgian business of 249 employees would be taxed at full rate in Belgium, it would nevertheless be eligible for SME subsidy under a European labelled programme. SMEs are a crucial element in the supplier network of large enterprises which are already on their way towards Industry 4.0. According to German economist Hans Heinrich Bass, "empirical research on SME as well as policies to promote SME have a long tradition in [West] Germany, dating back into the 19th century. Until the mid 20th century, most researchers considered SME as an impediment to further economic development and SME policies were thus designed in the framework of social policies. Only the Ordoliberalism school, the founding fathers of Germany's social market economy, discovered their strengths, considered SME as a solution to mid 20th century economic problems (mass unemployment, abuse of economic power), and laid the foundations for non selective (functional) industrial policies to promote SMEs." Only around 20% of European SMEs are substantially digitalized, compared to almost 50% of major businesses. Small and medium sized companies make up 56.2% of the non financial sector. Smaller companies account for more than 60% of the value contributed to the non financial sector in Belgium, Italy, and Spain, three of the nations worst hit by the COVID 19 pandemic. An estimated 50% of Europe's small firms may fail because they lack the substantial financial reserves required to weather the crisis. With around 338,000 functioning in Bulgaria in 2022, SMEs and mid caps are major contributors in the Bulgarian economy. They also employ over 75% of the workforce and create 65% of the economy's added value. The results of an EU survey conducted in 2021 suggest that during the pandemic, in countries with larger fiscal packages, SMEs were on average more likely to experience bankruptcy even after controlling for the size of the shock, the use of bank financing, and country and sector fixed effects. When policy assistance rises by 1% of GDP, the probabilities of bankruptcy for a SME are 2.7 times higher than for a non SME. Credit limitations are especially difficult for SMEs and new businesses to overcome. Credit constraints affect 24% of SMEs and 27% of young businesses. Poland
The SME sector in Poland generates almost 50% of the GDP, and out of that, for instance, in 2011, micro companies generated 29.6%, small companies 7.7%, and medium companies 10.4% (big companies 24.0%; other entities 16.5%, and revenues from customs duties and taxes generated 11.9%). In 2011, out of the total of 1,784,603 entities operating in Poland, merely 3,189 were classified as "large", so 1,781,414 were micro, small, or medium. SMEs employed 6.3 million people out of the total of 9.0 million of labour employed in the private sector. In Poland in 2011 there were 36.2 SMEs per 1,000 inhabitants. Nearly seven million people are employed by small businesses in Poland, which accounts for around half of the country's GDP, yet smaller businesses are less likely than larger ones to invest in strategies to combat climate change or boost energy efficiency. In October 2021, the Bank Ochrony rodowiska, a Polish bank that specializes in funding environmental protection initiatives received €75 million from the European Investment Bank (EIB) for these small enterprises. The Polish bank wants to use at least 50% of the loan for initiatives with a clear emphasis on tackling climate change, such improving building energy efficiency or turning to renewable energy sources like solar power. The money is set to be distributed across Poland, with around 80% of it projected to go to cohesive regions. Very small companies are called in the UK micro entities, which have simpler financial reporting requirements. Such micro enterprises must meet any two of the following criteria: balance sheet £316,000 or less; turnover £632,000 or less; employees 10 or less. Many small and medium sized businesses form part of the UK's currently growing Mittelstand, or Brittelstand'' as it is also sometimes named. These are businesses in Britain that are not only small or medium but also have a much broader set of values and more elastic definition. The Department for Business Innovation and Skills estimated that at the start of 2014, 99.3% of UK private sector businesses were SMEs, with their £1.6 trillion annual turnover accounting for 47% of private sector turnover. In order to support SMEs, the UK government set a target in 2010 "that 25% of government’s spend, either directly or in supply chains, goes to SMEs by 2015"; it achieved this by 2013.
Многосторонние организации подвергаются критике за использование единого подхода для всех. Правовые границы МСП в разных странах мира различаются, и ниже приведен список верхних пределов МСП в некоторых странах.
Type of business with small personnel numbers
Small and medium sized enterprises (SMEs) or small and medium sized businesses (SMBs) are businesses whose personnel and revenue numbers fall below certain limits. The abbreviation "SME" is used by international organizations such as the World Bank, the OECD, European Union, the United Nations, and the World Trade Organization (WTO). In any given national economy, SMEs sometimes outnumber large companies by a wide margin and also employ many more people. For example, Australian SMEs makeup 98% of all Australian businesses, produce one third of the total GDP (gross domestic product) and employ 4.7 million people. In Chile, in the commercial year 2014, 98.5% of the firms were classified as SMEs. In Tunisia, the self employed workers alone account for about 28% of the total non farm employment, and firms with fewer than 100 employees account for about 62% of total employment. The United States' SMEs generate half of all U. S. jobs, but only 40% of GDP. Developing countries tend to have a larger share of small and medium sized enterprises. Although they create more new jobs than large firms, SMEs also suffer the majority of job destruction/contraction. According to the World Bank Group's 2021 FINDEX database, there is a $1.7 trillion funding gap for formal, women owned micro, small, and medium sized enterprises. Additionally, over 68% of small women owned firms lack access to finance.' Overview
SMEs are important for economic and social reasons, given the sector's role in employment. Due to their sizes, SMEs are heavily influenced by their Chief Executive Officer, a. k. a. CEOs. The CEOs of SMEs are often the founders, owners, and managers of the SMEs. The duties of the CEO in a SME mirror those of the CEO of a large company: the CEO needs to strategically allocate their time, energy, and assets to direct the SMEs. Typically, the CEO is the strategist, champion and leader for developing the SME or the prime reason for the business failing. At the employee level, Petrakis and Kostis (2012) explore the role of interpersonal trust and knowledge in the number of small and medium enterprises. They conclude that knowledge positively affects the number of SMEs, which in turn positively affects interpersonal trust. Note that the empirical results indicate that interpersonal trust does not affect the number of SMEs. Therefore, although knowledge development can reinforce SMEs, trust becomes widespread in a society when the number of SMEs is greater. Legal boundary on SMEs around the world
Multilateral organizations have been criticized for using one measure for all. The legal boundary of SMEs around the world vary, and below is a list of the upper limits of SMEs in some countries. Africa
African small businesses frequently struggle to get the cash they require to thrive. According to the SME Finance Forum, the formal financing gap for African SMEs averaged 17% of GDP across the 43 countries assessed in 2017. According to the World Bank, women own 58% of all MSMEs in Africa. The European Investment Bank's Banking in Africa survey, 2021 suggests that most of the responding banks had a non performing loan (NPL) ratio of at least 5%. NPLs account for at least 10% of the SME portfolio in approximately one third of African banks. Furthermore, 50% of the banks had at least 5% of their SME portfolio under the moratorium, and 40% had at least 5% of SME loans under some type of restructuring. Somalia
In Somalia, the term is SME (for "small, medium, and micro enterprises"); elsewhere in Africa, MSME stands for "micro, small, and medium enterprises". An SME is defined as a small business that has more than 30 employees but less than 250 employees. South Africa
In the National Small Business Amendment Act 2004, micro businesses in the different sectors, varying from the manufacturing to the retail sectors, are defined as businesses with five or fewer employees and a turnover of up to R100,000 ZAR ($6,900). Very small businesses employ between 6 and 20 employees, while small businesses employ between 21 and 50 employees. The upper limit for turnover in a small business varies from R1 million ($69,200) in the agricultural sector to R13 million ($899,800) in the catering, accommodations and other trade sectors as well as in the manufacturing sector, with a maximum of R32 million ($2,214,800) in the wholesale trade sector. Medium sized businesses''' usually employ up to 200 people (100 in the agricultural sector), and the maximum turnover varies from R5 million ($346,100) in the agricultural sector to R51 ($3,529,800) million in the manufacturing sector and R64 ($4,429,600) million in the wholesale trade, commercial agents and allied services sector. A comprehensive definition of an SME in South Africa is, therefore, an enterprise with one or more of the following characteristics:
Fewer than 200 employees,
Annual turnover of less than R64 million,
Capital assets of less than R10 million,
Direct managerial involvement by owners
Asia
SMEs account for nearly 90% of all company entities in developing Asian countries and are the principal private sector employers, supplying 50 80% of all jobs. SMEs cover 97 99% of all firms in South east Asia, contributing considerably to each country's GDP—for example, 46% in Singapore, 57% in Indonesia, and over 40% in other nations. 98% of business establishments in Hong Kong are defined as SMEs and employed 45% of the work force. India
India defines Micro, Small and Medium Enterprises based on dual criteria of investment and turnover. This definition is provided in Section 7 of Micro, Small & Medium Enterprises Development Act, 2006 (MSMED Act) and was notified in September 2006. The Act provides for the classification of enterprises based on their investment size and the nature of the activity undertaken by that enterprise. As per MSMED Act, enterprises are classified into two categories manufacturing enterprises and service enterprises. For each of these categories, a definition is given to explain what constitutes a micro enterprise or a small enterprise or a medium enterprise. If an enterprise does not fall under the above categories, it would be considered a large scale enterprise. In June 2020, India updated the definition as follows:
+Sr NoClassificationCriteria (in ₹)1Micro EnterprisesInvestment <= 1 cr and Turnover <= 5 cr2Small EnterprisesInvestment <= 10 cr and Turnover <= 50 cr3Medium EnterprisesInvestment <= 50 cr and Turnover <= 250 cr
Businesses that are declared as MSMEs and within specific sectors and criteria can then apply for "priority sector" lending to help with business expenses; banks have annual targets set by the Prime Minister's Task Force on MSMEs for year on year increases of lending to various categories of MSMEs. MSME is considered a key contributor to India's growth and contributes 48% to India's total export. Indonesia
In Indonesia, the government defines micro, small, and medium enterprises (Indonesian: usaha mikro kecil menengah, UMKM) based on their assets and revenues according to Law No. 20/2008:
Type Maximum assets, Rp Gross Revenue, Rp Number of Employee Statistics Indonesia Micro maximum 50,000,000 maximum 300,000,000 1 4 Small 50,000,000 500,000,000 300,000,000 2,500,000,000 5 9 Medium 500,000,000 10,000,000,000 2,500,000,000 50,000,000,000 20 99 Large >10,000,000,000 >50,000,000,000 >99
An annual revenue of Rp 50 billion is approximately equal to US$3.1 million as of April 2024. Despite their significant contribution to GDP and job creation, Indonesian MSMEs confront a number of obstacles. One of the most significant is capital access: 60 70 percent of MSMEs lack access to financial institutions and their funding options. Other restrictions include inadequate infrastructure, difficulties acquiring company licences and permissions, high tax rates, political insecurity, and improving their brand image in the digital era. 21st century businesses strategically use both their websites and social media in order to advertise their products and control their branding. Quality content on both information streams will positively affect branding and attract customers. The People's Business Credit (Kredit Usaha Rakyat, or KUR [id]) was established in 2007 by President Yudhoyono to extend credit to businesses that were considered "feasible but not bankable". Bank Rakyat Indonesia conducts more than half of KUR lending nationwide. In Jakarta, the capital city of Indonesia, 529 MSMEs with the potential to be funded have been identified by Bank Indonesia. Economy Sector Number of Companies Processing Industry 151 Health Services and Social Activities 1 Rental leasing services without option rights, employment, travel agents and other business support 9 Professional, Scientific And Technical Services 11 Other Service Activities 21 Arts, Entertainment And Recreation 1 Construction 2 Water Procurement, Waste Management And Recycling, Waste And Garbage Disposal And Cleaning 1 Provision of Accommodation and Provision of Food and Drink 80 Wholesale and retail trade of car and motorcycle repair and maintenance 236 Agriculture, Forestry, and Fisheries 16
Philippines
According to the Department of Trade and Industry's 2020 List of Establishments report, there are 957,620 registered business enterprises operating in the country, composed of 99.51% MSMEs and 0.49% large firms. The MSMEs consist of 88.77% microenterprises, 10.25% small enterprises, and 0.49% medium enterprises. Among the top industry sectors include (1) wholesale and retail trade; repair of motor vehicles and motorcycles (445,386); (2) accommodation and food service activities (134,046); (3) manufacturing (110,916); (4) other service activities (62,376); and (5) financial and insurance activities (45,558) which accounted for about 83.77% of the total number of MSME establishments. Prior to the pandemic, MSMEs generated more than 5.38 million jobs or 62.66% of the country's total employment with a 29.38% share from micro enterprises followed by 25.78% and 7.50% for small and medium enterprises. Europe
European Union
Small companies are important to the European economy as they account for 99.8% of non financial enterprises in the European Union (EU) and employ two thirds of the workforce in the EU. The majority of European firms are small and medium sized enterprises (SMEs), employing over 100 million people. Due to the COVID 19 pandemic, a large majority of SMEs saw a decline in revenue during 2020 2021. Medium sized businesses (or mid caps) play an important role in the European economy, accounting for a considerable part of employment and wealth production. According to a recent European Commission analysis, mid cap companies (250 3000 people) make up about 17% of total employment and 21% of turnover in the EU27 business sector. Micro firms (with fewer than nine employees) employ 38% of the total workforce, while SMEs with fewer than 250 employees account for 34.4%. Larger (XL) firms with 3,000 or more employees account for 10.1% of overall employment in EU business sectors. According to Eurostat SBS statistics, in 2021, tiny enterprises (0 9 workers) and SMEs (excluding micro firms) employed around 30% and 34.5% of the entire workforce in EU27 business sectors, while bigger firms (250+ employees) contributed for 36.4% of overall employment. The pandemic has had a greater impact on SMEs than on large businesses, with an average sales loss of 26% versus 23% for large businesses. Government assistance appears to have benefited SMEs more than large corporations among the companies that do have overdraft facilities, indicating a successful application of policies to ease financial limitations for SMEs even when they receive help from the banking sector. The EIB Group contributed more than €16.35 billion to small and medium sized firms in 2022. SMEs were more quick in altering output during the pandemic, despite the intensity of the shock. In reaction to the crisis, one third of major enterprises altered their output or services, compared to 37% of SMEs. The criteria for defining the size of a business differ from country to country, with many countries having programs of business rate reduction and financial subsidy for SMEs. According to the European Commission, SMEs are enterprises which meet the following definition of staff headcount and either the turnover or balance sheet total definitions:
Company category Staff headcount Turnover Balance sheet total Medium sized < 250 ≤ €50 million ≤ €43 million Small < 50 ≤ €10 million ≤ €10 million Micro < 10 ≤ €2 million ≤ €2 million
In July 2011, the European Commission said it would open a consultation on the definition of SMEs in 2012. A consultation document was issued on 6 February 2018 and the consultation period closed on 6 May 2018. as of November 2019, no conclusions or responses have yet emerged. In Europe, there are three broad parameters that define SMEs:
Micro enterprises have up to 10 employees
Small enterprises have up to 50 employees
Medium sized enterprises have up to 250 employees. The European definition of SME follows: "The category of micro, small and medium sized enterprises (SMEs) is made up of enterprises which employ fewer than 250 persons and which have an annual turnover not exceeding 50 million euro, and/or an annual balance sheet total not exceeding 43 million euro." In order to prepare for an evaluation and revision of some features of the small and medium sized enterprises definition European Union established public consultation period from 6 February 2018 to 6 May 2018. Public consultation is available for all EU member country citizens and organizations. Especially, national and regional authorities, enterprises, business associations or organizations, venture capital providers, research and academic institutions, and individual citizens are expected as the main contributors. EU member states have had individual definitions of what constitutes an SME. For example, the definition in Germany had a limit of 255 employees, while in Belgium it could have been 100. The result is that while a Belgian business of 249 employees would be taxed at full rate in Belgium, it would nevertheless be eligible for SME subsidy under a European labelled programme. SMEs are a crucial element in the supplier network of large enterprises which are already on their way towards Industry 4.0. According to German economist Hans Heinrich Bass, "empirical research on SME as well as policies to promote SME have a long tradition in [West] Germany, dating back into the 19th century. Until the mid 20th century, most researchers considered SME as an impediment to further economic development and SME policies were thus designed in the framework of social policies. Only the Ordoliberalism school, the founding fathers of Germany's social market economy, discovered their strengths, considered SME as a solution to mid 20th century economic problems (mass unemployment, abuse of economic power), and laid the foundations for non selective (functional) industrial policies to promote SMEs." Only around 20% of European SMEs are substantially digitalized, compared to almost 50% of major businesses. Small and medium sized companies make up 56.2% of the non financial sector. Smaller companies account for more than 60% of the value contributed to the non financial sector in Belgium, Italy, and Spain, three of the nations worst hit by the COVID 19 pandemic. An estimated 50% of Europe's small firms may fail because they lack the substantial financial reserves required to weather the crisis. With around 338,000 functioning in Bulgaria in 2022, SMEs and mid caps are major contributors in the Bulgarian economy. They also employ over 75% of the workforce and create 65% of the economy's added value. The results of an EU survey conducted in 2021 suggest that during the pandemic, in countries with larger fiscal packages, SMEs were on average more likely to experience bankruptcy even after controlling for the size of the shock, the use of bank financing, and country and sector fixed effects. When policy assistance rises by 1% of GDP, the probabilities of bankruptcy for a SME are 2.7 times higher than for a non SME. Credit limitations are especially difficult for SMEs and new businesses to overcome. Credit constraints affect 24% of SMEs and 27% of young businesses. Poland
The SME sector in Poland generates almost 50% of the GDP, and out of that, for instance, in 2011, micro companies generated 29.6%, small companies 7.7%, and medium companies 10.4% (big companies 24.0%; other entities 16.5%, and revenues from customs duties and taxes generated 11.9%). In 2011, out of the total of 1,784,603 entities operating in Poland, merely 3,189 were classified as "large", so 1,781,414 were micro, small, or medium. SMEs employed 6.3 million people out of the total of 9.0 million of labour employed in the private sector. In Poland in 2011 there were 36.2 SMEs per 1,000 inhabitants. Nearly seven million people are employed by small businesses in Poland, which accounts for around half of the country's GDP, yet smaller businesses are less likely than larger ones to invest in strategies to combat climate change or boost energy efficiency. In October 2021, the Bank Ochrony rodowiska, a Polish bank that specializes in funding environmental protection initiatives received €75 million from the European Investment Bank (EIB) for these small enterprises. The Polish bank wants to use at least 50% of the loan for initiatives with a clear emphasis on tackling climate change, such improving building energy efficiency or turning to renewable energy sources like solar power. The money is set to be distributed across Poland, with around 80% of it projected to go to cohesive regions. Very small companies are called in the UK micro entities, which have simpler financial reporting requirements. Such micro enterprises must meet any two of the following criteria: balance sheet £316,000 or less; turnover £632,000 or less; employees 10 or less. Many small and medium sized businesses form part of the UK's currently growing Mittelstand, or Brittelstand'' as it is also sometimes named. These are businesses in Britain that are not only small or medium but also have a much broader set of values and more elastic definition. The Department for Business Innovation and Skills estimated that at the start of 2014, 99.3% of UK private sector businesses were SMEs, with their £1.6 trillion annual turnover accounting for 47% of private sector turnover. In order to support SMEs, the UK government set a target in 2010 "that 25% of government’s spend, either directly or in supply chains, goes to SMEs by 2015"; it achieved this by 2013.
Small and medium sized enterprises (SMEs) or small and medium sized businesses (SMBs) are businesses whose personnel and revenue numbers fall below certain limits. The abbreviation "SME" is used by international organizations such as the World Bank, the OECD, European Union, the United Nations, and the World Trade Organization (WTO). In any given national economy, SMEs sometimes outnumber large companies by a wide margin and also employ many more people. For example, Australian SMEs makeup 98% of all Australian businesses, produce one third of the total GDP (gross domestic product) and employ 4.7 million people. In Chile, in the commercial year 2014, 98.5% of the firms were classified as SMEs. In Tunisia, the self employed workers alone account for about 28% of the total non farm employment, and firms with fewer than 100 employees account for about 62% of total employment. The United States' SMEs generate half of all U. S. jobs, but only 40% of GDP. Developing countries tend to have a larger share of small and medium sized enterprises. Although they create more new jobs than large firms, SMEs also suffer the majority of job destruction/contraction. According to the World Bank Group's 2021 FINDEX database, there is a $1.7 trillion funding gap for formal, women owned micro, small, and medium sized enterprises. Additionally, over 68% of small women owned firms lack access to finance.' Overview
SMEs are important for economic and social reasons, given the sector's role in employment. Due to their sizes, SMEs are heavily influenced by their Chief Executive Officer, a. k. a. CEOs. The CEOs of SMEs are often the founders, owners, and managers of the SMEs. The duties of the CEO in a SME mirror those of the CEO of a large company: the CEO needs to strategically allocate their time, energy, and assets to direct the SMEs. Typically, the CEO is the strategist, champion and leader for developing the SME or the prime reason for the business failing. At the employee level, Petrakis and Kostis (2012) explore the role of interpersonal trust and knowledge in the number of small and medium enterprises. They conclude that knowledge positively affects the number of SMEs, which in turn positively affects interpersonal trust. Note that the empirical results indicate that interpersonal trust does not affect the number of SMEs. Therefore, although knowledge development can reinforce SMEs, trust becomes widespread in a society when the number of SMEs is greater. Legal boundary on SMEs around the world
Multilateral organizations have been criticized for using one measure for all. The legal boundary of SMEs around the world vary, and below is a list of the upper limits of SMEs in some countries. Africa
African small businesses frequently struggle to get the cash they require to thrive. According to the SME Finance Forum, the formal financing gap for African SMEs averaged 17% of GDP across the 43 countries assessed in 2017. According to the World Bank, women own 58% of all MSMEs in Africa. The European Investment Bank's Banking in Africa survey, 2021 suggests that most of the responding banks had a non performing loan (NPL) ratio of at least 5%. NPLs account for at least 10% of the SME portfolio in approximately one third of African banks. Furthermore, 50% of the banks had at least 5% of their SME portfolio under the moratorium, and 40% had at least 5% of SME loans under some type of restructuring. Somalia
In Somalia, the term is SME (for "small, medium, and micro enterprises"); elsewhere in Africa, MSME stands for "micro, small, and medium enterprises". An SME is defined as a small business that has more than 30 employees but less than 250 employees. South Africa
In the National Small Business Amendment Act 2004, micro businesses in the different sectors, varying from the manufacturing to the retail sectors, are defined as businesses with five or fewer employees and a turnover of up to R100,000 ZAR ($6,900). Very small businesses employ between 6 and 20 employees, while small businesses employ between 21 and 50 employees. The upper limit for turnover in a small business varies from R1 million ($69,200) in the agricultural sector to R13 million ($899,800) in the catering, accommodations and other trade sectors as well as in the manufacturing sector, with a maximum of R32 million ($2,214,800) in the wholesale trade sector. Medium sized businesses''' usually employ up to 200 people (100 in the agricultural sector), and the maximum turnover varies from R5 million ($346,100) in the agricultural sector to R51 ($3,529,800) million in the manufacturing sector and R64 ($4,429,600) million in the wholesale trade, commercial agents and allied services sector. A comprehensive definition of an SME in South Africa is, therefore, an enterprise with one or more of the following characteristics:
Fewer than 200 employees,
Annual turnover of less than R64 million,
Capital assets of less than R10 million,
Direct managerial involvement by owners
Asia
SMEs account for nearly 90% of all company entities in developing Asian countries and are the principal private sector employers, supplying 50 80% of all jobs. SMEs cover 97 99% of all firms in South east Asia, contributing considerably to each country's GDP—for example, 46% in Singapore, 57% in Indonesia, and over 40% in other nations. 98% of business establishments in Hong Kong are defined as SMEs and employed 45% of the work force. India
India defines Micro, Small and Medium Enterprises based on dual criteria of investment and turnover. This definition is provided in Section 7 of Micro, Small & Medium Enterprises Development Act, 2006 (MSMED Act) and was notified in September 2006. The Act provides for the classification of enterprises based on their investment size and the nature of the activity undertaken by that enterprise. As per MSMED Act, enterprises are classified into two categories manufacturing enterprises and service enterprises. For each of these categories, a definition is given to explain what constitutes a micro enterprise or a small enterprise or a medium enterprise. If an enterprise does not fall under the above categories, it would be considered a large scale enterprise. In June 2020, India updated the definition as follows:
+Sr NoClassificationCriteria (in ₹)1Micro EnterprisesInvestment <= 1 cr and Turnover <= 5 cr2Small EnterprisesInvestment <= 10 cr and Turnover <= 50 cr3Medium EnterprisesInvestment <= 50 cr and Turnover <= 250 cr
Businesses that are declared as MSMEs and within specific sectors and criteria can then apply for "priority sector" lending to help with business expenses; banks have annual targets set by the Prime Minister's Task Force on MSMEs for year on year increases of lending to various categories of MSMEs. MSME is considered a key contributor to India's growth and contributes 48% to India's total export. Indonesia
In Indonesia, the government defines micro, small, and medium enterprises (Indonesian: usaha mikro kecil menengah, UMKM) based on their assets and revenues according to Law No. 20/2008:
Type Maximum assets, Rp Gross Revenue, Rp Number of Employee Statistics Indonesia Micro maximum 50,000,000 maximum 300,000,000 1 4 Small 50,000,000 500,000,000 300,000,000 2,500,000,000 5 9 Medium 500,000,000 10,000,000,000 2,500,000,000 50,000,000,000 20 99 Large >10,000,000,000 >50,000,000,000 >99
An annual revenue of Rp 50 billion is approximately equal to US$3.1 million as of April 2024. Despite their significant contribution to GDP and job creation, Indonesian MSMEs confront a number of obstacles. One of the most significant is capital access: 60 70 percent of MSMEs lack access to financial institutions and their funding options. Other restrictions include inadequate infrastructure, difficulties acquiring company licences and permissions, high tax rates, political insecurity, and improving their brand image in the digital era. 21st century businesses strategically use both their websites and social media in order to advertise their products and control their branding. Quality content on both information streams will positively affect branding and attract customers. The People's Business Credit (Kredit Usaha Rakyat, or KUR [id]) was established in 2007 by President Yudhoyono to extend credit to businesses that were considered "feasible but not bankable". Bank Rakyat Indonesia conducts more than half of KUR lending nationwide. In Jakarta, the capital city of Indonesia, 529 MSMEs with the potential to be funded have been identified by Bank Indonesia. Economy Sector Number of Companies Processing Industry 151 Health Services and Social Activities 1 Rental leasing services without option rights, employment, travel agents and other business support 9 Professional, Scientific And Technical Services 11 Other Service Activities 21 Arts, Entertainment And Recreation 1 Construction 2 Water Procurement, Waste Management And Recycling, Waste And Garbage Disposal And Cleaning 1 Provision of Accommodation and Provision of Food and Drink 80 Wholesale and retail trade of car and motorcycle repair and maintenance 236 Agriculture, Forestry, and Fisheries 16
Philippines
According to the Department of Trade and Industry's 2020 List of Establishments report, there are 957,620 registered business enterprises operating in the country, composed of 99.51% MSMEs and 0.49% large firms. The MSMEs consist of 88.77% microenterprises, 10.25% small enterprises, and 0.49% medium enterprises. Among the top industry sectors include (1) wholesale and retail trade; repair of motor vehicles and motorcycles (445,386); (2) accommodation and food service activities (134,046); (3) manufacturing (110,916); (4) other service activities (62,376); and (5) financial and insurance activities (45,558) which accounted for about 83.77% of the total number of MSME establishments. Prior to the pandemic, MSMEs generated more than 5.38 million jobs or 62.66% of the country's total employment with a 29.38% share from micro enterprises followed by 25.78% and 7.50% for small and medium enterprises. Europe
European Union
Small companies are important to the European economy as they account for 99.8% of non financial enterprises in the European Union (EU) and employ two thirds of the workforce in the EU. The majority of European firms are small and medium sized enterprises (SMEs), employing over 100 million people. Due to the COVID 19 pandemic, a large majority of SMEs saw a decline in revenue during 2020 2021. Medium sized businesses (or mid caps) play an important role in the European economy, accounting for a considerable part of employment and wealth production. According to a recent European Commission analysis, mid cap companies (250 3000 people) make up about 17% of total employment and 21% of turnover in the EU27 business sector. Micro firms (with fewer than nine employees) employ 38% of the total workforce, while SMEs with fewer than 250 employees account for 34.4%. Larger (XL) firms with 3,000 or more employees account for 10.1% of overall employment in EU business sectors. According to Eurostat SBS statistics, in 2021, tiny enterprises (0 9 workers) and SMEs (excluding micro firms) employed around 30% and 34.5% of the entire workforce in EU27 business sectors, while bigger firms (250+ employees) contributed for 36.4% of overall employment. The pandemic has had a greater impact on SMEs than on large businesses, with an average sales loss of 26% versus 23% for large businesses. Government assistance appears to have benefited SMEs more than large corporations among the companies that do have overdraft facilities, indicating a successful application of policies to ease financial limitations for SMEs even when they receive help from the banking sector. The EIB Group contributed more than €16.35 billion to small and medium sized firms in 2022. SMEs were more quick in altering output during the pandemic, despite the intensity of the shock. In reaction to the crisis, one third of major enterprises altered their output or services, compared to 37% of SMEs. The criteria for defining the size of a business differ from country to country, with many countries having programs of business rate reduction and financial subsidy for SMEs. According to the European Commission, SMEs are enterprises which meet the following definition of staff headcount and either the turnover or balance sheet total definitions:
Company category Staff headcount Turnover Balance sheet total Medium sized < 250 ≤ €50 million ≤ €43 million Small < 50 ≤ €10 million ≤ €10 million Micro < 10 ≤ €2 million ≤ €2 million
In July 2011, the European Commission said it would open a consultation on the definition of SMEs in 2012. A consultation document was issued on 6 February 2018 and the consultation period closed on 6 May 2018. as of November 2019, no conclusions or responses have yet emerged. In Europe, there are three broad parameters that define SMEs:
Micro enterprises have up to 10 employees
Small enterprises have up to 50 employees
Medium sized enterprises have up to 250 employees. The European definition of SME follows: "The category of micro, small and medium sized enterprises (SMEs) is made up of enterprises which employ fewer than 250 persons and which have an annual turnover not exceeding 50 million euro, and/or an annual balance sheet total not exceeding 43 million euro." In order to prepare for an evaluation and revision of some features of the small and medium sized enterprises definition European Union established public consultation period from 6 February 2018 to 6 May 2018. Public consultation is available for all EU member country citizens and organizations. Especially, national and regional authorities, enterprises, business associations or organizations, venture capital providers, research and academic institutions, and individual citizens are expected as the main contributors. EU member states have had individual definitions of what constitutes an SME. For example, the definition in Germany had a limit of 255 employees, while in Belgium it could have been 100. The result is that while a Belgian business of 249 employees would be taxed at full rate in Belgium, it would nevertheless be eligible for SME subsidy under a European labelled programme. SMEs are a crucial element in the supplier network of large enterprises which are already on their way towards Industry 4.0. According to German economist Hans Heinrich Bass, "empirical research on SME as well as policies to promote SME have a long tradition in [West] Germany, dating back into the 19th century. Until the mid 20th century, most researchers considered SME as an impediment to further economic development and SME policies were thus designed in the framework of social policies. Only the Ordoliberalism school, the founding fathers of Germany's social market economy, discovered their strengths, considered SME as a solution to mid 20th century economic problems (mass unemployment, abuse of economic power), and laid the foundations for non selective (functional) industrial policies to promote SMEs." Only around 20% of European SMEs are substantially digitalized, compared to almost 50% of major businesses. Small and medium sized companies make up 56.2% of the non financial sector. Smaller companies account for more than 60% of the value contributed to the non financial sector in Belgium, Italy, and Spain, three of the nations worst hit by the COVID 19 pandemic. An estimated 50% of Europe's small firms may fail because they lack the substantial financial reserves required to weather the crisis. With around 338,000 functioning in Bulgaria in 2022, SMEs and mid caps are major contributors in the Bulgarian economy. They also employ over 75% of the workforce and create 65% of the economy's added value. The results of an EU survey conducted in 2021 suggest that during the pandemic, in countries with larger fiscal packages, SMEs were on average more likely to experience bankruptcy even after controlling for the size of the shock, the use of bank financing, and country and sector fixed effects. When policy assistance rises by 1% of GDP, the probabilities of bankruptcy for a SME are 2.7 times higher than for a non SME. Credit limitations are especially difficult for SMEs and new businesses to overcome. Credit constraints affect 24% of SMEs and 27% of young businesses. Poland
The SME sector in Poland generates almost 50% of the GDP, and out of that, for instance, in 2011, micro companies generated 29.6%, small companies 7.7%, and medium companies 10.4% (big companies 24.0%; other entities 16.5%, and revenues from customs duties and taxes generated 11.9%). In 2011, out of the total of 1,784,603 entities operating in Poland, merely 3,189 were classified as "large", so 1,781,414 were micro, small, or medium. SMEs employed 6.3 million people out of the total of 9.0 million of labour employed in the private sector. In Poland in 2011 there were 36.2 SMEs per 1,000 inhabitants. Nearly seven million people are employed by small businesses in Poland, which accounts for around half of the country's GDP, yet smaller businesses are less likely than larger ones to invest in strategies to combat climate change or boost energy efficiency. In October 2021, the Bank Ochrony rodowiska, a Polish bank that specializes in funding environmental protection initiatives received €75 million from the European Investment Bank (EIB) for these small enterprises. The Polish bank wants to use at least 50% of the loan for initiatives with a clear emphasis on tackling climate change, such improving building energy efficiency or turning to renewable energy sources like solar power. The money is set to be distributed across Poland, with around 80% of it projected to go to cohesive regions. Very small companies are called in the UK micro entities, which have simpler financial reporting requirements. Such micro enterprises must meet any two of the following criteria: balance sheet £316,000 or less; turnover £632,000 or less; employees 10 or less. Many small and medium sized businesses form part of the UK's currently growing Mittelstand, or Brittelstand'' as it is also sometimes named. These are businesses in Britain that are not only small or medium but also have a much broader set of values and more elastic definition. The Department for Business Innovation and Skills estimated that at the start of 2014, 99.3% of UK private sector businesses were SMEs, with their £1.6 trillion annual turnover accounting for 47% of private sector turnover. In order to support SMEs, the UK government set a target in 2010 "that 25% of government’s spend, either directly or in supply chains, goes to SMEs by 2015"; it achieved this by 2013.
Африка. Африканские малые предприятия часто сталкиваются с трудностями в получении необходимых средств для процветания. Согласно данным Форума по финансированию МСП, официальный дефицит финансирования для африканских МСП в среднем составлял 17% ВВП в 43 странах, оцениваемых в 2017 году. По данным Всемирного банка, женщины владеют 58% всех МСП в Африке. Исследование Европейского инвестиционного банка "Банковское дело в Африке, 2021" показывает, что у большинства банков-респондентов доля неработающих кредитов (НПЛ) составляла не менее 5%. НПЛ составляют не менее 10% портфеля МСП примерно в одной трети африканских банков. Кроме того, 50% банков имели по меньшей мере 5% своего портфеля МСП в рамках моратория, а 40% имели по меньшей мере 5% кредитов МСП в рамках какого-либо типа реструктуризации.
Type of business with small personnel numbers
Small and medium sized enterprises (SMEs) or small and medium sized businesses (SMBs) are businesses whose personnel and revenue numbers fall below certain limits. The abbreviation "SME" is used by international organizations such as the World Bank, the OECD, European Union, the United Nations, and the World Trade Organization (WTO). In any given national economy, SMEs sometimes outnumber large companies by a wide margin and also employ many more people. For example, Australian SMEs makeup 98% of all Australian businesses, produce one third of the total GDP (gross domestic product) and employ 4.7 million people. In Chile, in the commercial year 2014, 98.5% of the firms were classified as SMEs. In Tunisia, the self employed workers alone account for about 28% of the total non farm employment, and firms with fewer than 100 employees account for about 62% of total employment. The United States' SMEs generate half of all U. S. jobs, but only 40% of GDP. Developing countries tend to have a larger share of small and medium sized enterprises. Although they create more new jobs than large firms, SMEs also suffer the majority of job destruction/contraction. According to the World Bank Group's 2021 FINDEX database, there is a $1.7 trillion funding gap for formal, women owned micro, small, and medium sized enterprises. Additionally, over 68% of small women owned firms lack access to finance.' Overview
SMEs are important for economic and social reasons, given the sector's role in employment. Due to their sizes, SMEs are heavily influenced by their Chief Executive Officer, a. k. a. CEOs. The CEOs of SMEs are often the founders, owners, and managers of the SMEs. The duties of the CEO in a SME mirror those of the CEO of a large company: the CEO needs to strategically allocate their time, energy, and assets to direct the SMEs. Typically, the CEO is the strategist, champion and leader for developing the SME or the prime reason for the business failing. At the employee level, Petrakis and Kostis (2012) explore the role of interpersonal trust and knowledge in the number of small and medium enterprises. They conclude that knowledge positively affects the number of SMEs, which in turn positively affects interpersonal trust. Note that the empirical results indicate that interpersonal trust does not affect the number of SMEs. Therefore, although knowledge development can reinforce SMEs, trust becomes widespread in a society when the number of SMEs is greater. Legal boundary on SMEs around the world
Multilateral organizations have been criticized for using one measure for all. The legal boundary of SMEs around the world vary, and below is a list of the upper limits of SMEs in some countries. Africa
African small businesses frequently struggle to get the cash they require to thrive. According to the SME Finance Forum, the formal financing gap for African SMEs averaged 17% of GDP across the 43 countries assessed in 2017. According to the World Bank, women own 58% of all MSMEs in Africa. The European Investment Bank's Banking in Africa survey, 2021 suggests that most of the responding banks had a non performing loan (NPL) ratio of at least 5%. NPLs account for at least 10% of the SME portfolio in approximately one third of African banks. Furthermore, 50% of the banks had at least 5% of their SME portfolio under the moratorium, and 40% had at least 5% of SME loans under some type of restructuring. Somalia
In Somalia, the term is SME (for "small, medium, and micro enterprises"); elsewhere in Africa, MSME stands for "micro, small, and medium enterprises". An SME is defined as a small business that has more than 30 employees but less than 250 employees. South Africa
In the National Small Business Amendment Act 2004, micro businesses in the different sectors, varying from the manufacturing to the retail sectors, are defined as businesses with five or fewer employees and a turnover of up to R100,000 ZAR ($6,900). Very small businesses employ between 6 and 20 employees, while small businesses employ between 21 and 50 employees. The upper limit for turnover in a small business varies from R1 million ($69,200) in the agricultural sector to R13 million ($899,800) in the catering, accommodations and other trade sectors as well as in the manufacturing sector, with a maximum of R32 million ($2,214,800) in the wholesale trade sector. Medium sized businesses''' usually employ up to 200 people (100 in the agricultural sector), and the maximum turnover varies from R5 million ($346,100) in the agricultural sector to R51 ($3,529,800) million in the manufacturing sector and R64 ($4,429,600) million in the wholesale trade, commercial agents and allied services sector. A comprehensive definition of an SME in South Africa is, therefore, an enterprise with one or more of the following characteristics:
Fewer than 200 employees,
Annual turnover of less than R64 million,
Capital assets of less than R10 million,
Direct managerial involvement by owners
Asia
SMEs account for nearly 90% of all company entities in developing Asian countries and are the principal private sector employers, supplying 50 80% of all jobs. SMEs cover 97 99% of all firms in South east Asia, contributing considerably to each country's GDP—for example, 46% in Singapore, 57% in Indonesia, and over 40% in other nations. 98% of business establishments in Hong Kong are defined as SMEs and employed 45% of the work force. India
India defines Micro, Small and Medium Enterprises based on dual criteria of investment and turnover. This definition is provided in Section 7 of Micro, Small & Medium Enterprises Development Act, 2006 (MSMED Act) and was notified in September 2006. The Act provides for the classification of enterprises based on their investment size and the nature of the activity undertaken by that enterprise. As per MSMED Act, enterprises are classified into two categories manufacturing enterprises and service enterprises. For each of these categories, a definition is given to explain what constitutes a micro enterprise or a small enterprise or a medium enterprise. If an enterprise does not fall under the above categories, it would be considered a large scale enterprise. In June 2020, India updated the definition as follows:
+Sr NoClassificationCriteria (in ₹)1Micro EnterprisesInvestment <= 1 cr and Turnover <= 5 cr2Small EnterprisesInvestment <= 10 cr and Turnover <= 50 cr3Medium EnterprisesInvestment <= 50 cr and Turnover <= 250 cr
Businesses that are declared as MSMEs and within specific sectors and criteria can then apply for "priority sector" lending to help with business expenses; banks have annual targets set by the Prime Minister's Task Force on MSMEs for year on year increases of lending to various categories of MSMEs. MSME is considered a key contributor to India's growth and contributes 48% to India's total export. Indonesia
In Indonesia, the government defines micro, small, and medium enterprises (Indonesian: usaha mikro kecil menengah, UMKM) based on their assets and revenues according to Law No. 20/2008:
Type Maximum assets, Rp Gross Revenue, Rp Number of Employee Statistics Indonesia Micro maximum 50,000,000 maximum 300,000,000 1 4 Small 50,000,000 500,000,000 300,000,000 2,500,000,000 5 9 Medium 500,000,000 10,000,000,000 2,500,000,000 50,000,000,000 20 99 Large >10,000,000,000 >50,000,000,000 >99
An annual revenue of Rp 50 billion is approximately equal to US$3.1 million as of April 2024. Despite their significant contribution to GDP and job creation, Indonesian MSMEs confront a number of obstacles. One of the most significant is capital access: 60 70 percent of MSMEs lack access to financial institutions and their funding options. Other restrictions include inadequate infrastructure, difficulties acquiring company licences and permissions, high tax rates, political insecurity, and improving their brand image in the digital era. 21st century businesses strategically use both their websites and social media in order to advertise their products and control their branding. Quality content on both information streams will positively affect branding and attract customers. The People's Business Credit (Kredit Usaha Rakyat, or KUR [id]) was established in 2007 by President Yudhoyono to extend credit to businesses that were considered "feasible but not bankable". Bank Rakyat Indonesia conducts more than half of KUR lending nationwide. In Jakarta, the capital city of Indonesia, 529 MSMEs with the potential to be funded have been identified by Bank Indonesia. Economy Sector Number of Companies Processing Industry 151 Health Services and Social Activities 1 Rental leasing services without option rights, employment, travel agents and other business support 9 Professional, Scientific And Technical Services 11 Other Service Activities 21 Arts, Entertainment And Recreation 1 Construction 2 Water Procurement, Waste Management And Recycling, Waste And Garbage Disposal And Cleaning 1 Provision of Accommodation and Provision of Food and Drink 80 Wholesale and retail trade of car and motorcycle repair and maintenance 236 Agriculture, Forestry, and Fisheries 16
Philippines
According to the Department of Trade and Industry's 2020 List of Establishments report, there are 957,620 registered business enterprises operating in the country, composed of 99.51% MSMEs and 0.49% large firms. The MSMEs consist of 88.77% microenterprises, 10.25% small enterprises, and 0.49% medium enterprises. Among the top industry sectors include (1) wholesale and retail trade; repair of motor vehicles and motorcycles (445,386); (2) accommodation and food service activities (134,046); (3) manufacturing (110,916); (4) other service activities (62,376); and (5) financial and insurance activities (45,558) which accounted for about 83.77% of the total number of MSME establishments. Prior to the pandemic, MSMEs generated more than 5.38 million jobs or 62.66% of the country's total employment with a 29.38% share from micro enterprises followed by 25.78% and 7.50% for small and medium enterprises. Europe
European Union
Small companies are important to the European economy as they account for 99.8% of non financial enterprises in the European Union (EU) and employ two thirds of the workforce in the EU. The majority of European firms are small and medium sized enterprises (SMEs), employing over 100 million people. Due to the COVID 19 pandemic, a large majority of SMEs saw a decline in revenue during 2020 2021. Medium sized businesses (or mid caps) play an important role in the European economy, accounting for a considerable part of employment and wealth production. According to a recent European Commission analysis, mid cap companies (250 3000 people) make up about 17% of total employment and 21% of turnover in the EU27 business sector. Micro firms (with fewer than nine employees) employ 38% of the total workforce, while SMEs with fewer than 250 employees account for 34.4%. Larger (XL) firms with 3,000 or more employees account for 10.1% of overall employment in EU business sectors. According to Eurostat SBS statistics, in 2021, tiny enterprises (0 9 workers) and SMEs (excluding micro firms) employed around 30% and 34.5% of the entire workforce in EU27 business sectors, while bigger firms (250+ employees) contributed for 36.4% of overall employment. The pandemic has had a greater impact on SMEs than on large businesses, with an average sales loss of 26% versus 23% for large businesses. Government assistance appears to have benefited SMEs more than large corporations among the companies that do have overdraft facilities, indicating a successful application of policies to ease financial limitations for SMEs even when they receive help from the banking sector. The EIB Group contributed more than €16.35 billion to small and medium sized firms in 2022. SMEs were more quick in altering output during the pandemic, despite the intensity of the shock. In reaction to the crisis, one third of major enterprises altered their output or services, compared to 37% of SMEs. The criteria for defining the size of a business differ from country to country, with many countries having programs of business rate reduction and financial subsidy for SMEs. According to the European Commission, SMEs are enterprises which meet the following definition of staff headcount and either the turnover or balance sheet total definitions:
Company category Staff headcount Turnover Balance sheet total Medium sized < 250 ≤ €50 million ≤ €43 million Small < 50 ≤ €10 million ≤ €10 million Micro < 10 ≤ €2 million ≤ €2 million
In July 2011, the European Commission said it would open a consultation on the definition of SMEs in 2012. A consultation document was issued on 6 February 2018 and the consultation period closed on 6 May 2018. as of November 2019, no conclusions or responses have yet emerged. In Europe, there are three broad parameters that define SMEs:
Micro enterprises have up to 10 employees
Small enterprises have up to 50 employees
Medium sized enterprises have up to 250 employees. The European definition of SME follows: "The category of micro, small and medium sized enterprises (SMEs) is made up of enterprises which employ fewer than 250 persons and which have an annual turnover not exceeding 50 million euro, and/or an annual balance sheet total not exceeding 43 million euro." In order to prepare for an evaluation and revision of some features of the small and medium sized enterprises definition European Union established public consultation period from 6 February 2018 to 6 May 2018. Public consultation is available for all EU member country citizens and organizations. Especially, national and regional authorities, enterprises, business associations or organizations, venture capital providers, research and academic institutions, and individual citizens are expected as the main contributors. EU member states have had individual definitions of what constitutes an SME. For example, the definition in Germany had a limit of 255 employees, while in Belgium it could have been 100. The result is that while a Belgian business of 249 employees would be taxed at full rate in Belgium, it would nevertheless be eligible for SME subsidy under a European labelled programme. SMEs are a crucial element in the supplier network of large enterprises which are already on their way towards Industry 4.0. According to German economist Hans Heinrich Bass, "empirical research on SME as well as policies to promote SME have a long tradition in [West] Germany, dating back into the 19th century. Until the mid 20th century, most researchers considered SME as an impediment to further economic development and SME policies were thus designed in the framework of social policies. Only the Ordoliberalism school, the founding fathers of Germany's social market economy, discovered their strengths, considered SME as a solution to mid 20th century economic problems (mass unemployment, abuse of economic power), and laid the foundations for non selective (functional) industrial policies to promote SMEs." Only around 20% of European SMEs are substantially digitalized, compared to almost 50% of major businesses. Small and medium sized companies make up 56.2% of the non financial sector. Smaller companies account for more than 60% of the value contributed to the non financial sector in Belgium, Italy, and Spain, three of the nations worst hit by the COVID 19 pandemic. An estimated 50% of Europe's small firms may fail because they lack the substantial financial reserves required to weather the crisis. With around 338,000 functioning in Bulgaria in 2022, SMEs and mid caps are major contributors in the Bulgarian economy. They also employ over 75% of the workforce and create 65% of the economy's added value. The results of an EU survey conducted in 2021 suggest that during the pandemic, in countries with larger fiscal packages, SMEs were on average more likely to experience bankruptcy even after controlling for the size of the shock, the use of bank financing, and country and sector fixed effects. When policy assistance rises by 1% of GDP, the probabilities of bankruptcy for a SME are 2.7 times higher than for a non SME. Credit limitations are especially difficult for SMEs and new businesses to overcome. Credit constraints affect 24% of SMEs and 27% of young businesses. Poland
The SME sector in Poland generates almost 50% of the GDP, and out of that, for instance, in 2011, micro companies generated 29.6%, small companies 7.7%, and medium companies 10.4% (big companies 24.0%; other entities 16.5%, and revenues from customs duties and taxes generated 11.9%). In 2011, out of the total of 1,784,603 entities operating in Poland, merely 3,189 were classified as "large", so 1,781,414 were micro, small, or medium. SMEs employed 6.3 million people out of the total of 9.0 million of labour employed in the private sector. In Poland in 2011 there were 36.2 SMEs per 1,000 inhabitants. Nearly seven million people are employed by small businesses in Poland, which accounts for around half of the country's GDP, yet smaller businesses are less likely than larger ones to invest in strategies to combat climate change or boost energy efficiency. In October 2021, the Bank Ochrony rodowiska, a Polish bank that specializes in funding environmental protection initiatives received €75 million from the European Investment Bank (EIB) for these small enterprises. The Polish bank wants to use at least 50% of the loan for initiatives with a clear emphasis on tackling climate change, such improving building energy efficiency or turning to renewable energy sources like solar power. The money is set to be distributed across Poland, with around 80% of it projected to go to cohesive regions. Very small companies are called in the UK micro entities, which have simpler financial reporting requirements. Such micro enterprises must meet any two of the following criteria: balance sheet £316,000 or less; turnover £632,000 or less; employees 10 or less. Many small and medium sized businesses form part of the UK's currently growing Mittelstand, or Brittelstand'' as it is also sometimes named. These are businesses in Britain that are not only small or medium but also have a much broader set of values and more elastic definition. The Department for Business Innovation and Skills estimated that at the start of 2014, 99.3% of UK private sector businesses were SMEs, with their £1.6 trillion annual turnover accounting for 47% of private sector turnover. In order to support SMEs, the UK government set a target in 2010 "that 25% of government’s spend, either directly or in supply chains, goes to SMEs by 2015"; it achieved this by 2013.
Small and medium sized enterprises (SMEs) or small and medium sized businesses (SMBs) are businesses whose personnel and revenue numbers fall below certain limits. The abbreviation "SME" is used by international organizations such as the World Bank, the OECD, European Union, the United Nations, and the World Trade Organization (WTO). In any given national economy, SMEs sometimes outnumber large companies by a wide margin and also employ many more people. For example, Australian SMEs makeup 98% of all Australian businesses, produce one third of the total GDP (gross domestic product) and employ 4.7 million people. In Chile, in the commercial year 2014, 98.5% of the firms were classified as SMEs. In Tunisia, the self employed workers alone account for about 28% of the total non farm employment, and firms with fewer than 100 employees account for about 62% of total employment. The United States' SMEs generate half of all U. S. jobs, but only 40% of GDP. Developing countries tend to have a larger share of small and medium sized enterprises. Although they create more new jobs than large firms, SMEs also suffer the majority of job destruction/contraction. According to the World Bank Group's 2021 FINDEX database, there is a $1.7 trillion funding gap for formal, women owned micro, small, and medium sized enterprises. Additionally, over 68% of small women owned firms lack access to finance.' Overview
SMEs are important for economic and social reasons, given the sector's role in employment. Due to their sizes, SMEs are heavily influenced by their Chief Executive Officer, a. k. a. CEOs. The CEOs of SMEs are often the founders, owners, and managers of the SMEs. The duties of the CEO in a SME mirror those of the CEO of a large company: the CEO needs to strategically allocate their time, energy, and assets to direct the SMEs. Typically, the CEO is the strategist, champion and leader for developing the SME or the prime reason for the business failing. At the employee level, Petrakis and Kostis (2012) explore the role of interpersonal trust and knowledge in the number of small and medium enterprises. They conclude that knowledge positively affects the number of SMEs, which in turn positively affects interpersonal trust. Note that the empirical results indicate that interpersonal trust does not affect the number of SMEs. Therefore, although knowledge development can reinforce SMEs, trust becomes widespread in a society when the number of SMEs is greater. Legal boundary on SMEs around the world
Multilateral organizations have been criticized for using one measure for all. The legal boundary of SMEs around the world vary, and below is a list of the upper limits of SMEs in some countries. Africa
African small businesses frequently struggle to get the cash they require to thrive. According to the SME Finance Forum, the formal financing gap for African SMEs averaged 17% of GDP across the 43 countries assessed in 2017. According to the World Bank, women own 58% of all MSMEs in Africa. The European Investment Bank's Banking in Africa survey, 2021 suggests that most of the responding banks had a non performing loan (NPL) ratio of at least 5%. NPLs account for at least 10% of the SME portfolio in approximately one third of African banks. Furthermore, 50% of the banks had at least 5% of their SME portfolio under the moratorium, and 40% had at least 5% of SME loans under some type of restructuring. Somalia
In Somalia, the term is SME (for "small, medium, and micro enterprises"); elsewhere in Africa, MSME stands for "micro, small, and medium enterprises". An SME is defined as a small business that has more than 30 employees but less than 250 employees. South Africa
In the National Small Business Amendment Act 2004, micro businesses in the different sectors, varying from the manufacturing to the retail sectors, are defined as businesses with five or fewer employees and a turnover of up to R100,000 ZAR ($6,900). Very small businesses employ between 6 and 20 employees, while small businesses employ between 21 and 50 employees. The upper limit for turnover in a small business varies from R1 million ($69,200) in the agricultural sector to R13 million ($899,800) in the catering, accommodations and other trade sectors as well as in the manufacturing sector, with a maximum of R32 million ($2,214,800) in the wholesale trade sector. Medium sized businesses''' usually employ up to 200 people (100 in the agricultural sector), and the maximum turnover varies from R5 million ($346,100) in the agricultural sector to R51 ($3,529,800) million in the manufacturing sector and R64 ($4,429,600) million in the wholesale trade, commercial agents and allied services sector. A comprehensive definition of an SME in South Africa is, therefore, an enterprise with one or more of the following characteristics:
Fewer than 200 employees,
Annual turnover of less than R64 million,
Capital assets of less than R10 million,
Direct managerial involvement by owners
Asia
SMEs account for nearly 90% of all company entities in developing Asian countries and are the principal private sector employers, supplying 50 80% of all jobs. SMEs cover 97 99% of all firms in South east Asia, contributing considerably to each country's GDP—for example, 46% in Singapore, 57% in Indonesia, and over 40% in other nations. 98% of business establishments in Hong Kong are defined as SMEs and employed 45% of the work force. India
India defines Micro, Small and Medium Enterprises based on dual criteria of investment and turnover. This definition is provided in Section 7 of Micro, Small & Medium Enterprises Development Act, 2006 (MSMED Act) and was notified in September 2006. The Act provides for the classification of enterprises based on their investment size and the nature of the activity undertaken by that enterprise. As per MSMED Act, enterprises are classified into two categories manufacturing enterprises and service enterprises. For each of these categories, a definition is given to explain what constitutes a micro enterprise or a small enterprise or a medium enterprise. If an enterprise does not fall under the above categories, it would be considered a large scale enterprise. In June 2020, India updated the definition as follows:
+Sr NoClassificationCriteria (in ₹)1Micro EnterprisesInvestment <= 1 cr and Turnover <= 5 cr2Small EnterprisesInvestment <= 10 cr and Turnover <= 50 cr3Medium EnterprisesInvestment <= 50 cr and Turnover <= 250 cr
Businesses that are declared as MSMEs and within specific sectors and criteria can then apply for "priority sector" lending to help with business expenses; banks have annual targets set by the Prime Minister's Task Force on MSMEs for year on year increases of lending to various categories of MSMEs. MSME is considered a key contributor to India's growth and contributes 48% to India's total export. Indonesia
In Indonesia, the government defines micro, small, and medium enterprises (Indonesian: usaha mikro kecil menengah, UMKM) based on their assets and revenues according to Law No. 20/2008:
Type Maximum assets, Rp Gross Revenue, Rp Number of Employee Statistics Indonesia Micro maximum 50,000,000 maximum 300,000,000 1 4 Small 50,000,000 500,000,000 300,000,000 2,500,000,000 5 9 Medium 500,000,000 10,000,000,000 2,500,000,000 50,000,000,000 20 99 Large >10,000,000,000 >50,000,000,000 >99
An annual revenue of Rp 50 billion is approximately equal to US$3.1 million as of April 2024. Despite their significant contribution to GDP and job creation, Indonesian MSMEs confront a number of obstacles. One of the most significant is capital access: 60 70 percent of MSMEs lack access to financial institutions and their funding options. Other restrictions include inadequate infrastructure, difficulties acquiring company licences and permissions, high tax rates, political insecurity, and improving their brand image in the digital era. 21st century businesses strategically use both their websites and social media in order to advertise their products and control their branding. Quality content on both information streams will positively affect branding and attract customers. The People's Business Credit (Kredit Usaha Rakyat, or KUR [id]) was established in 2007 by President Yudhoyono to extend credit to businesses that were considered "feasible but not bankable". Bank Rakyat Indonesia conducts more than half of KUR lending nationwide. In Jakarta, the capital city of Indonesia, 529 MSMEs with the potential to be funded have been identified by Bank Indonesia. Economy Sector Number of Companies Processing Industry 151 Health Services and Social Activities 1 Rental leasing services without option rights, employment, travel agents and other business support 9 Professional, Scientific And Technical Services 11 Other Service Activities 21 Arts, Entertainment And Recreation 1 Construction 2 Water Procurement, Waste Management And Recycling, Waste And Garbage Disposal And Cleaning 1 Provision of Accommodation and Provision of Food and Drink 80 Wholesale and retail trade of car and motorcycle repair and maintenance 236 Agriculture, Forestry, and Fisheries 16
Philippines
According to the Department of Trade and Industry's 2020 List of Establishments report, there are 957,620 registered business enterprises operating in the country, composed of 99.51% MSMEs and 0.49% large firms. The MSMEs consist of 88.77% microenterprises, 10.25% small enterprises, and 0.49% medium enterprises. Among the top industry sectors include (1) wholesale and retail trade; repair of motor vehicles and motorcycles (445,386); (2) accommodation and food service activities (134,046); (3) manufacturing (110,916); (4) other service activities (62,376); and (5) financial and insurance activities (45,558) which accounted for about 83.77% of the total number of MSME establishments. Prior to the pandemic, MSMEs generated more than 5.38 million jobs or 62.66% of the country's total employment with a 29.38% share from micro enterprises followed by 25.78% and 7.50% for small and medium enterprises. Europe
European Union
Small companies are important to the European economy as they account for 99.8% of non financial enterprises in the European Union (EU) and employ two thirds of the workforce in the EU. The majority of European firms are small and medium sized enterprises (SMEs), employing over 100 million people. Due to the COVID 19 pandemic, a large majority of SMEs saw a decline in revenue during 2020 2021. Medium sized businesses (or mid caps) play an important role in the European economy, accounting for a considerable part of employment and wealth production. According to a recent European Commission analysis, mid cap companies (250 3000 people) make up about 17% of total employment and 21% of turnover in the EU27 business sector. Micro firms (with fewer than nine employees) employ 38% of the total workforce, while SMEs with fewer than 250 employees account for 34.4%. Larger (XL) firms with 3,000 or more employees account for 10.1% of overall employment in EU business sectors. According to Eurostat SBS statistics, in 2021, tiny enterprises (0 9 workers) and SMEs (excluding micro firms) employed around 30% and 34.5% of the entire workforce in EU27 business sectors, while bigger firms (250+ employees) contributed for 36.4% of overall employment. The pandemic has had a greater impact on SMEs than on large businesses, with an average sales loss of 26% versus 23% for large businesses. Government assistance appears to have benefited SMEs more than large corporations among the companies that do have overdraft facilities, indicating a successful application of policies to ease financial limitations for SMEs even when they receive help from the banking sector. The EIB Group contributed more than €16.35 billion to small and medium sized firms in 2022. SMEs were more quick in altering output during the pandemic, despite the intensity of the shock. In reaction to the crisis, one third of major enterprises altered their output or services, compared to 37% of SMEs. The criteria for defining the size of a business differ from country to country, with many countries having programs of business rate reduction and financial subsidy for SMEs. According to the European Commission, SMEs are enterprises which meet the following definition of staff headcount and either the turnover or balance sheet total definitions:
Company category Staff headcount Turnover Balance sheet total Medium sized < 250 ≤ €50 million ≤ €43 million Small < 50 ≤ €10 million ≤ €10 million Micro < 10 ≤ €2 million ≤ €2 million
In July 2011, the European Commission said it would open a consultation on the definition of SMEs in 2012. A consultation document was issued on 6 February 2018 and the consultation period closed on 6 May 2018. as of November 2019, no conclusions or responses have yet emerged. In Europe, there are three broad parameters that define SMEs:
Micro enterprises have up to 10 employees
Small enterprises have up to 50 employees
Medium sized enterprises have up to 250 employees. The European definition of SME follows: "The category of micro, small and medium sized enterprises (SMEs) is made up of enterprises which employ fewer than 250 persons and which have an annual turnover not exceeding 50 million euro, and/or an annual balance sheet total not exceeding 43 million euro." In order to prepare for an evaluation and revision of some features of the small and medium sized enterprises definition European Union established public consultation period from 6 February 2018 to 6 May 2018. Public consultation is available for all EU member country citizens and organizations. Especially, national and regional authorities, enterprises, business associations or organizations, venture capital providers, research and academic institutions, and individual citizens are expected as the main contributors. EU member states have had individual definitions of what constitutes an SME. For example, the definition in Germany had a limit of 255 employees, while in Belgium it could have been 100. The result is that while a Belgian business of 249 employees would be taxed at full rate in Belgium, it would nevertheless be eligible for SME subsidy under a European labelled programme. SMEs are a crucial element in the supplier network of large enterprises which are already on their way towards Industry 4.0. According to German economist Hans Heinrich Bass, "empirical research on SME as well as policies to promote SME have a long tradition in [West] Germany, dating back into the 19th century. Until the mid 20th century, most researchers considered SME as an impediment to further economic development and SME policies were thus designed in the framework of social policies. Only the Ordoliberalism school, the founding fathers of Germany's social market economy, discovered their strengths, considered SME as a solution to mid 20th century economic problems (mass unemployment, abuse of economic power), and laid the foundations for non selective (functional) industrial policies to promote SMEs." Only around 20% of European SMEs are substantially digitalized, compared to almost 50% of major businesses. Small and medium sized companies make up 56.2% of the non financial sector. Smaller companies account for more than 60% of the value contributed to the non financial sector in Belgium, Italy, and Spain, three of the nations worst hit by the COVID 19 pandemic. An estimated 50% of Europe's small firms may fail because they lack the substantial financial reserves required to weather the crisis. With around 338,000 functioning in Bulgaria in 2022, SMEs and mid caps are major contributors in the Bulgarian economy. They also employ over 75% of the workforce and create 65% of the economy's added value. The results of an EU survey conducted in 2021 suggest that during the pandemic, in countries with larger fiscal packages, SMEs were on average more likely to experience bankruptcy even after controlling for the size of the shock, the use of bank financing, and country and sector fixed effects. When policy assistance rises by 1% of GDP, the probabilities of bankruptcy for a SME are 2.7 times higher than for a non SME. Credit limitations are especially difficult for SMEs and new businesses to overcome. Credit constraints affect 24% of SMEs and 27% of young businesses. Poland
The SME sector in Poland generates almost 50% of the GDP, and out of that, for instance, in 2011, micro companies generated 29.6%, small companies 7.7%, and medium companies 10.4% (big companies 24.0%; other entities 16.5%, and revenues from customs duties and taxes generated 11.9%). In 2011, out of the total of 1,784,603 entities operating in Poland, merely 3,189 were classified as "large", so 1,781,414 were micro, small, or medium. SMEs employed 6.3 million people out of the total of 9.0 million of labour employed in the private sector. In Poland in 2011 there were 36.2 SMEs per 1,000 inhabitants. Nearly seven million people are employed by small businesses in Poland, which accounts for around half of the country's GDP, yet smaller businesses are less likely than larger ones to invest in strategies to combat climate change or boost energy efficiency. In October 2021, the Bank Ochrony rodowiska, a Polish bank that specializes in funding environmental protection initiatives received €75 million from the European Investment Bank (EIB) for these small enterprises. The Polish bank wants to use at least 50% of the loan for initiatives with a clear emphasis on tackling climate change, such improving building energy efficiency or turning to renewable energy sources like solar power. The money is set to be distributed across Poland, with around 80% of it projected to go to cohesive regions. Very small companies are called in the UK micro entities, which have simpler financial reporting requirements. Such micro enterprises must meet any two of the following criteria: balance sheet £316,000 or less; turnover £632,000 or less; employees 10 or less. Many small and medium sized businesses form part of the UK's currently growing Mittelstand, or Brittelstand'' as it is also sometimes named. These are businesses in Britain that are not only small or medium but also have a much broader set of values and more elastic definition. The Department for Business Innovation and Skills estimated that at the start of 2014, 99.3% of UK private sector businesses were SMEs, with their £1.6 trillion annual turnover accounting for 47% of private sector turnover. In order to support SMEs, the UK government set a target in 2010 "that 25% of government’s spend, either directly or in supply chains, goes to SMEs by 2015"; it achieved this by 2013.
Сомали. В Сомали термин МСП означает "малые, средние и микропредприятия"; в других странах Африки МСП означает "микро, малые и средние предприятия". МСП определяется как малый бизнес, в котором работает более 30 человек, но менее 250 человек.
Type of business with small personnel numbers
Small and medium sized enterprises (SMEs) or small and medium sized businesses (SMBs) are businesses whose personnel and revenue numbers fall below certain limits. The abbreviation "SME" is used by international organizations such as the World Bank, the OECD, European Union, the United Nations, and the World Trade Organization (WTO). In any given national economy, SMEs sometimes outnumber large companies by a wide margin and also employ many more people. For example, Australian SMEs makeup 98% of all Australian businesses, produce one third of the total GDP (gross domestic product) and employ 4.7 million people. In Chile, in the commercial year 2014, 98.5% of the firms were classified as SMEs. In Tunisia, the self employed workers alone account for about 28% of the total non farm employment, and firms with fewer than 100 employees account for about 62% of total employment. The United States' SMEs generate half of all U. S. jobs, but only 40% of GDP. Developing countries tend to have a larger share of small and medium sized enterprises. Although they create more new jobs than large firms, SMEs also suffer the majority of job destruction/contraction. According to the World Bank Group's 2021 FINDEX database, there is a $1.7 trillion funding gap for formal, women owned micro, small, and medium sized enterprises. Additionally, over 68% of small women owned firms lack access to finance.' Overview
SMEs are important for economic and social reasons, given the sector's role in employment. Due to their sizes, SMEs are heavily influenced by their Chief Executive Officer, a. k. a. CEOs. The CEOs of SMEs are often the founders, owners, and managers of the SMEs. The duties of the CEO in a SME mirror those of the CEO of a large company: the CEO needs to strategically allocate their time, energy, and assets to direct the SMEs. Typically, the CEO is the strategist, champion and leader for developing the SME or the prime reason for the business failing. At the employee level, Petrakis and Kostis (2012) explore the role of interpersonal trust and knowledge in the number of small and medium enterprises. They conclude that knowledge positively affects the number of SMEs, which in turn positively affects interpersonal trust. Note that the empirical results indicate that interpersonal trust does not affect the number of SMEs. Therefore, although knowledge development can reinforce SMEs, trust becomes widespread in a society when the number of SMEs is greater. Legal boundary on SMEs around the world
Multilateral organizations have been criticized for using one measure for all. The legal boundary of SMEs around the world vary, and below is a list of the upper limits of SMEs in some countries. Africa
African small businesses frequently struggle to get the cash they require to thrive. According to the SME Finance Forum, the formal financing gap for African SMEs averaged 17% of GDP across the 43 countries assessed in 2017. According to the World Bank, women own 58% of all MSMEs in Africa. The European Investment Bank's Banking in Africa survey, 2021 suggests that most of the responding banks had a non performing loan (NPL) ratio of at least 5%. NPLs account for at least 10% of the SME portfolio in approximately one third of African banks. Furthermore, 50% of the banks had at least 5% of their SME portfolio under the moratorium, and 40% had at least 5% of SME loans under some type of restructuring. Somalia
In Somalia, the term is SME (for "small, medium, and micro enterprises"); elsewhere in Africa, MSME stands for "micro, small, and medium enterprises". An SME is defined as a small business that has more than 30 employees but less than 250 employees. South Africa
In the National Small Business Amendment Act 2004, micro businesses in the different sectors, varying from the manufacturing to the retail sectors, are defined as businesses with five or fewer employees and a turnover of up to R100,000 ZAR ($6,900). Very small businesses employ between 6 and 20 employees, while small businesses employ between 21 and 50 employees. The upper limit for turnover in a small business varies from R1 million ($69,200) in the agricultural sector to R13 million ($899,800) in the catering, accommodations and other trade sectors as well as in the manufacturing sector, with a maximum of R32 million ($2,214,800) in the wholesale trade sector. Medium sized businesses''' usually employ up to 200 people (100 in the agricultural sector), and the maximum turnover varies from R5 million ($346,100) in the agricultural sector to R51 ($3,529,800) million in the manufacturing sector and R64 ($4,429,600) million in the wholesale trade, commercial agents and allied services sector. A comprehensive definition of an SME in South Africa is, therefore, an enterprise with one or more of the following characteristics:
Fewer than 200 employees,
Annual turnover of less than R64 million,
Capital assets of less than R10 million,
Direct managerial involvement by owners
Asia
SMEs account for nearly 90% of all company entities in developing Asian countries and are the principal private sector employers, supplying 50 80% of all jobs. SMEs cover 97 99% of all firms in South east Asia, contributing considerably to each country's GDP—for example, 46% in Singapore, 57% in Indonesia, and over 40% in other nations. 98% of business establishments in Hong Kong are defined as SMEs and employed 45% of the work force. India
India defines Micro, Small and Medium Enterprises based on dual criteria of investment and turnover. This definition is provided in Section 7 of Micro, Small & Medium Enterprises Development Act, 2006 (MSMED Act) and was notified in September 2006. The Act provides for the classification of enterprises based on their investment size and the nature of the activity undertaken by that enterprise. As per MSMED Act, enterprises are classified into two categories manufacturing enterprises and service enterprises. For each of these categories, a definition is given to explain what constitutes a micro enterprise or a small enterprise or a medium enterprise. If an enterprise does not fall under the above categories, it would be considered a large scale enterprise. In June 2020, India updated the definition as follows:
+Sr NoClassificationCriteria (in ₹)1Micro EnterprisesInvestment <= 1 cr and Turnover <= 5 cr2Small EnterprisesInvestment <= 10 cr and Turnover <= 50 cr3Medium EnterprisesInvestment <= 50 cr and Turnover <= 250 cr
Businesses that are declared as MSMEs and within specific sectors and criteria can then apply for "priority sector" lending to help with business expenses; banks have annual targets set by the Prime Minister's Task Force on MSMEs for year on year increases of lending to various categories of MSMEs. MSME is considered a key contributor to India's growth and contributes 48% to India's total export. Indonesia
In Indonesia, the government defines micro, small, and medium enterprises (Indonesian: usaha mikro kecil menengah, UMKM) based on their assets and revenues according to Law No. 20/2008:
Type Maximum assets, Rp Gross Revenue, Rp Number of Employee Statistics Indonesia Micro maximum 50,000,000 maximum 300,000,000 1 4 Small 50,000,000 500,000,000 300,000,000 2,500,000,000 5 9 Medium 500,000,000 10,000,000,000 2,500,000,000 50,000,000,000 20 99 Large >10,000,000,000 >50,000,000,000 >99
An annual revenue of Rp 50 billion is approximately equal to US$3.1 million as of April 2024. Despite their significant contribution to GDP and job creation, Indonesian MSMEs confront a number of obstacles. One of the most significant is capital access: 60 70 percent of MSMEs lack access to financial institutions and their funding options. Other restrictions include inadequate infrastructure, difficulties acquiring company licences and permissions, high tax rates, political insecurity, and improving their brand image in the digital era. 21st century businesses strategically use both their websites and social media in order to advertise their products and control their branding. Quality content on both information streams will positively affect branding and attract customers. The People's Business Credit (Kredit Usaha Rakyat, or KUR [id]) was established in 2007 by President Yudhoyono to extend credit to businesses that were considered "feasible but not bankable". Bank Rakyat Indonesia conducts more than half of KUR lending nationwide. In Jakarta, the capital city of Indonesia, 529 MSMEs with the potential to be funded have been identified by Bank Indonesia. Economy Sector Number of Companies Processing Industry 151 Health Services and Social Activities 1 Rental leasing services without option rights, employment, travel agents and other business support 9 Professional, Scientific And Technical Services 11 Other Service Activities 21 Arts, Entertainment And Recreation 1 Construction 2 Water Procurement, Waste Management And Recycling, Waste And Garbage Disposal And Cleaning 1 Provision of Accommodation and Provision of Food and Drink 80 Wholesale and retail trade of car and motorcycle repair and maintenance 236 Agriculture, Forestry, and Fisheries 16
Philippines
According to the Department of Trade and Industry's 2020 List of Establishments report, there are 957,620 registered business enterprises operating in the country, composed of 99.51% MSMEs and 0.49% large firms. The MSMEs consist of 88.77% microenterprises, 10.25% small enterprises, and 0.49% medium enterprises. Among the top industry sectors include (1) wholesale and retail trade; repair of motor vehicles and motorcycles (445,386); (2) accommodation and food service activities (134,046); (3) manufacturing (110,916); (4) other service activities (62,376); and (5) financial and insurance activities (45,558) which accounted for about 83.77% of the total number of MSME establishments. Prior to the pandemic, MSMEs generated more than 5.38 million jobs or 62.66% of the country's total employment with a 29.38% share from micro enterprises followed by 25.78% and 7.50% for small and medium enterprises. Europe
European Union
Small companies are important to the European economy as they account for 99.8% of non financial enterprises in the European Union (EU) and employ two thirds of the workforce in the EU. The majority of European firms are small and medium sized enterprises (SMEs), employing over 100 million people. Due to the COVID 19 pandemic, a large majority of SMEs saw a decline in revenue during 2020 2021. Medium sized businesses (or mid caps) play an important role in the European economy, accounting for a considerable part of employment and wealth production. According to a recent European Commission analysis, mid cap companies (250 3000 people) make up about 17% of total employment and 21% of turnover in the EU27 business sector. Micro firms (with fewer than nine employees) employ 38% of the total workforce, while SMEs with fewer than 250 employees account for 34.4%. Larger (XL) firms with 3,000 or more employees account for 10.1% of overall employment in EU business sectors. According to Eurostat SBS statistics, in 2021, tiny enterprises (0 9 workers) and SMEs (excluding micro firms) employed around 30% and 34.5% of the entire workforce in EU27 business sectors, while bigger firms (250+ employees) contributed for 36.4% of overall employment. The pandemic has had a greater impact on SMEs than on large businesses, with an average sales loss of 26% versus 23% for large businesses. Government assistance appears to have benefited SMEs more than large corporations among the companies that do have overdraft facilities, indicating a successful application of policies to ease financial limitations for SMEs even when they receive help from the banking sector. The EIB Group contributed more than €16.35 billion to small and medium sized firms in 2022. SMEs were more quick in altering output during the pandemic, despite the intensity of the shock. In reaction to the crisis, one third of major enterprises altered their output or services, compared to 37% of SMEs. The criteria for defining the size of a business differ from country to country, with many countries having programs of business rate reduction and financial subsidy for SMEs. According to the European Commission, SMEs are enterprises which meet the following definition of staff headcount and either the turnover or balance sheet total definitions:
Company category Staff headcount Turnover Balance sheet total Medium sized < 250 ≤ €50 million ≤ €43 million Small < 50 ≤ €10 million ≤ €10 million Micro < 10 ≤ €2 million ≤ €2 million
In July 2011, the European Commission said it would open a consultation on the definition of SMEs in 2012. A consultation document was issued on 6 February 2018 and the consultation period closed on 6 May 2018. as of November 2019, no conclusions or responses have yet emerged. In Europe, there are three broad parameters that define SMEs:
Micro enterprises have up to 10 employees
Small enterprises have up to 50 employees
Medium sized enterprises have up to 250 employees. The European definition of SME follows: "The category of micro, small and medium sized enterprises (SMEs) is made up of enterprises which employ fewer than 250 persons and which have an annual turnover not exceeding 50 million euro, and/or an annual balance sheet total not exceeding 43 million euro." In order to prepare for an evaluation and revision of some features of the small and medium sized enterprises definition European Union established public consultation period from 6 February 2018 to 6 May 2018. Public consultation is available for all EU member country citizens and organizations. Especially, national and regional authorities, enterprises, business associations or organizations, venture capital providers, research and academic institutions, and individual citizens are expected as the main contributors. EU member states have had individual definitions of what constitutes an SME. For example, the definition in Germany had a limit of 255 employees, while in Belgium it could have been 100. The result is that while a Belgian business of 249 employees would be taxed at full rate in Belgium, it would nevertheless be eligible for SME subsidy under a European labelled programme. SMEs are a crucial element in the supplier network of large enterprises which are already on their way towards Industry 4.0. According to German economist Hans Heinrich Bass, "empirical research on SME as well as policies to promote SME have a long tradition in [West] Germany, dating back into the 19th century. Until the mid 20th century, most researchers considered SME as an impediment to further economic development and SME policies were thus designed in the framework of social policies. Only the Ordoliberalism school, the founding fathers of Germany's social market economy, discovered their strengths, considered SME as a solution to mid 20th century economic problems (mass unemployment, abuse of economic power), and laid the foundations for non selective (functional) industrial policies to promote SMEs." Only around 20% of European SMEs are substantially digitalized, compared to almost 50% of major businesses. Small and medium sized companies make up 56.2% of the non financial sector. Smaller companies account for more than 60% of the value contributed to the non financial sector in Belgium, Italy, and Spain, three of the nations worst hit by the COVID 19 pandemic. An estimated 50% of Europe's small firms may fail because they lack the substantial financial reserves required to weather the crisis. With around 338,000 functioning in Bulgaria in 2022, SMEs and mid caps are major contributors in the Bulgarian economy. They also employ over 75% of the workforce and create 65% of the economy's added value. The results of an EU survey conducted in 2021 suggest that during the pandemic, in countries with larger fiscal packages, SMEs were on average more likely to experience bankruptcy even after controlling for the size of the shock, the use of bank financing, and country and sector fixed effects. When policy assistance rises by 1% of GDP, the probabilities of bankruptcy for a SME are 2.7 times higher than for a non SME. Credit limitations are especially difficult for SMEs and new businesses to overcome. Credit constraints affect 24% of SMEs and 27% of young businesses. Poland
The SME sector in Poland generates almost 50% of the GDP, and out of that, for instance, in 2011, micro companies generated 29.6%, small companies 7.7%, and medium companies 10.4% (big companies 24.0%; other entities 16.5%, and revenues from customs duties and taxes generated 11.9%). In 2011, out of the total of 1,784,603 entities operating in Poland, merely 3,189 were classified as "large", so 1,781,414 were micro, small, or medium. SMEs employed 6.3 million people out of the total of 9.0 million of labour employed in the private sector. In Poland in 2011 there were 36.2 SMEs per 1,000 inhabitants. Nearly seven million people are employed by small businesses in Poland, which accounts for around half of the country's GDP, yet smaller businesses are less likely than larger ones to invest in strategies to combat climate change or boost energy efficiency. In October 2021, the Bank Ochrony rodowiska, a Polish bank that specializes in funding environmental protection initiatives received €75 million from the European Investment Bank (EIB) for these small enterprises. The Polish bank wants to use at least 50% of the loan for initiatives with a clear emphasis on tackling climate change, such improving building energy efficiency or turning to renewable energy sources like solar power. The money is set to be distributed across Poland, with around 80% of it projected to go to cohesive regions. Very small companies are called in the UK micro entities, which have simpler financial reporting requirements. Such micro enterprises must meet any two of the following criteria: balance sheet £316,000 or less; turnover £632,000 or less; employees 10 or less. Many small and medium sized businesses form part of the UK's currently growing Mittelstand, or Brittelstand'' as it is also sometimes named. These are businesses in Britain that are not only small or medium but also have a much broader set of values and more elastic definition. The Department for Business Innovation and Skills estimated that at the start of 2014, 99.3% of UK private sector businesses were SMEs, with their £1.6 trillion annual turnover accounting for 47% of private sector turnover. In order to support SMEs, the UK government set a target in 2010 "that 25% of government’s spend, either directly or in supply chains, goes to SMEs by 2015"; it achieved this by 2013.
Small and medium sized enterprises (SMEs) or small and medium sized businesses (SMBs) are businesses whose personnel and revenue numbers fall below certain limits. The abbreviation "SME" is used by international organizations such as the World Bank, the OECD, European Union, the United Nations, and the World Trade Organization (WTO). In any given national economy, SMEs sometimes outnumber large companies by a wide margin and also employ many more people. For example, Australian SMEs makeup 98% of all Australian businesses, produce one third of the total GDP (gross domestic product) and employ 4.7 million people. In Chile, in the commercial year 2014, 98.5% of the firms were classified as SMEs. In Tunisia, the self employed workers alone account for about 28% of the total non farm employment, and firms with fewer than 100 employees account for about 62% of total employment. The United States' SMEs generate half of all U. S. jobs, but only 40% of GDP. Developing countries tend to have a larger share of small and medium sized enterprises. Although they create more new jobs than large firms, SMEs also suffer the majority of job destruction/contraction. According to the World Bank Group's 2021 FINDEX database, there is a $1.7 trillion funding gap for formal, women owned micro, small, and medium sized enterprises. Additionally, over 68% of small women owned firms lack access to finance.' Overview
SMEs are important for economic and social reasons, given the sector's role in employment. Due to their sizes, SMEs are heavily influenced by their Chief Executive Officer, a. k. a. CEOs. The CEOs of SMEs are often the founders, owners, and managers of the SMEs. The duties of the CEO in a SME mirror those of the CEO of a large company: the CEO needs to strategically allocate their time, energy, and assets to direct the SMEs. Typically, the CEO is the strategist, champion and leader for developing the SME or the prime reason for the business failing. At the employee level, Petrakis and Kostis (2012) explore the role of interpersonal trust and knowledge in the number of small and medium enterprises. They conclude that knowledge positively affects the number of SMEs, which in turn positively affects interpersonal trust. Note that the empirical results indicate that interpersonal trust does not affect the number of SMEs. Therefore, although knowledge development can reinforce SMEs, trust becomes widespread in a society when the number of SMEs is greater. Legal boundary on SMEs around the world
Multilateral organizations have been criticized for using one measure for all. The legal boundary of SMEs around the world vary, and below is a list of the upper limits of SMEs in some countries. Africa
African small businesses frequently struggle to get the cash they require to thrive. According to the SME Finance Forum, the formal financing gap for African SMEs averaged 17% of GDP across the 43 countries assessed in 2017. According to the World Bank, women own 58% of all MSMEs in Africa. The European Investment Bank's Banking in Africa survey, 2021 suggests that most of the responding banks had a non performing loan (NPL) ratio of at least 5%. NPLs account for at least 10% of the SME portfolio in approximately one third of African banks. Furthermore, 50% of the banks had at least 5% of their SME portfolio under the moratorium, and 40% had at least 5% of SME loans under some type of restructuring. Somalia
In Somalia, the term is SME (for "small, medium, and micro enterprises"); elsewhere in Africa, MSME stands for "micro, small, and medium enterprises". An SME is defined as a small business that has more than 30 employees but less than 250 employees. South Africa
In the National Small Business Amendment Act 2004, micro businesses in the different sectors, varying from the manufacturing to the retail sectors, are defined as businesses with five or fewer employees and a turnover of up to R100,000 ZAR ($6,900). Very small businesses employ between 6 and 20 employees, while small businesses employ between 21 and 50 employees. The upper limit for turnover in a small business varies from R1 million ($69,200) in the agricultural sector to R13 million ($899,800) in the catering, accommodations and other trade sectors as well as in the manufacturing sector, with a maximum of R32 million ($2,214,800) in the wholesale trade sector. Medium sized businesses''' usually employ up to 200 people (100 in the agricultural sector), and the maximum turnover varies from R5 million ($346,100) in the agricultural sector to R51 ($3,529,800) million in the manufacturing sector and R64 ($4,429,600) million in the wholesale trade, commercial agents and allied services sector. A comprehensive definition of an SME in South Africa is, therefore, an enterprise with one or more of the following characteristics:
Fewer than 200 employees,
Annual turnover of less than R64 million,
Capital assets of less than R10 million,
Direct managerial involvement by owners
Asia
SMEs account for nearly 90% of all company entities in developing Asian countries and are the principal private sector employers, supplying 50 80% of all jobs. SMEs cover 97 99% of all firms in South east Asia, contributing considerably to each country's GDP—for example, 46% in Singapore, 57% in Indonesia, and over 40% in other nations. 98% of business establishments in Hong Kong are defined as SMEs and employed 45% of the work force. India
India defines Micro, Small and Medium Enterprises based on dual criteria of investment and turnover. This definition is provided in Section 7 of Micro, Small & Medium Enterprises Development Act, 2006 (MSMED Act) and was notified in September 2006. The Act provides for the classification of enterprises based on their investment size and the nature of the activity undertaken by that enterprise. As per MSMED Act, enterprises are classified into two categories manufacturing enterprises and service enterprises. For each of these categories, a definition is given to explain what constitutes a micro enterprise or a small enterprise or a medium enterprise. If an enterprise does not fall under the above categories, it would be considered a large scale enterprise. In June 2020, India updated the definition as follows:
+Sr NoClassificationCriteria (in ₹)1Micro EnterprisesInvestment <= 1 cr and Turnover <= 5 cr2Small EnterprisesInvestment <= 10 cr and Turnover <= 50 cr3Medium EnterprisesInvestment <= 50 cr and Turnover <= 250 cr
Businesses that are declared as MSMEs and within specific sectors and criteria can then apply for "priority sector" lending to help with business expenses; banks have annual targets set by the Prime Minister's Task Force on MSMEs for year on year increases of lending to various categories of MSMEs. MSME is considered a key contributor to India's growth and contributes 48% to India's total export. Indonesia
In Indonesia, the government defines micro, small, and medium enterprises (Indonesian: usaha mikro kecil menengah, UMKM) based on their assets and revenues according to Law No. 20/2008:
Type Maximum assets, Rp Gross Revenue, Rp Number of Employee Statistics Indonesia Micro maximum 50,000,000 maximum 300,000,000 1 4 Small 50,000,000 500,000,000 300,000,000 2,500,000,000 5 9 Medium 500,000,000 10,000,000,000 2,500,000,000 50,000,000,000 20 99 Large >10,000,000,000 >50,000,000,000 >99
An annual revenue of Rp 50 billion is approximately equal to US$3.1 million as of April 2024. Despite their significant contribution to GDP and job creation, Indonesian MSMEs confront a number of obstacles. One of the most significant is capital access: 60 70 percent of MSMEs lack access to financial institutions and their funding options. Other restrictions include inadequate infrastructure, difficulties acquiring company licences and permissions, high tax rates, political insecurity, and improving their brand image in the digital era. 21st century businesses strategically use both their websites and social media in order to advertise their products and control their branding. Quality content on both information streams will positively affect branding and attract customers. The People's Business Credit (Kredit Usaha Rakyat, or KUR [id]) was established in 2007 by President Yudhoyono to extend credit to businesses that were considered "feasible but not bankable". Bank Rakyat Indonesia conducts more than half of KUR lending nationwide. In Jakarta, the capital city of Indonesia, 529 MSMEs with the potential to be funded have been identified by Bank Indonesia. Economy Sector Number of Companies Processing Industry 151 Health Services and Social Activities 1 Rental leasing services without option rights, employment, travel agents and other business support 9 Professional, Scientific And Technical Services 11 Other Service Activities 21 Arts, Entertainment And Recreation 1 Construction 2 Water Procurement, Waste Management And Recycling, Waste And Garbage Disposal And Cleaning 1 Provision of Accommodation and Provision of Food and Drink 80 Wholesale and retail trade of car and motorcycle repair and maintenance 236 Agriculture, Forestry, and Fisheries 16
Philippines
According to the Department of Trade and Industry's 2020 List of Establishments report, there are 957,620 registered business enterprises operating in the country, composed of 99.51% MSMEs and 0.49% large firms. The MSMEs consist of 88.77% microenterprises, 10.25% small enterprises, and 0.49% medium enterprises. Among the top industry sectors include (1) wholesale and retail trade; repair of motor vehicles and motorcycles (445,386); (2) accommodation and food service activities (134,046); (3) manufacturing (110,916); (4) other service activities (62,376); and (5) financial and insurance activities (45,558) which accounted for about 83.77% of the total number of MSME establishments. Prior to the pandemic, MSMEs generated more than 5.38 million jobs or 62.66% of the country's total employment with a 29.38% share from micro enterprises followed by 25.78% and 7.50% for small and medium enterprises. Europe
European Union
Small companies are important to the European economy as they account for 99.8% of non financial enterprises in the European Union (EU) and employ two thirds of the workforce in the EU. The majority of European firms are small and medium sized enterprises (SMEs), employing over 100 million people. Due to the COVID 19 pandemic, a large majority of SMEs saw a decline in revenue during 2020 2021. Medium sized businesses (or mid caps) play an important role in the European economy, accounting for a considerable part of employment and wealth production. According to a recent European Commission analysis, mid cap companies (250 3000 people) make up about 17% of total employment and 21% of turnover in the EU27 business sector. Micro firms (with fewer than nine employees) employ 38% of the total workforce, while SMEs with fewer than 250 employees account for 34.4%. Larger (XL) firms with 3,000 or more employees account for 10.1% of overall employment in EU business sectors. According to Eurostat SBS statistics, in 2021, tiny enterprises (0 9 workers) and SMEs (excluding micro firms) employed around 30% and 34.5% of the entire workforce in EU27 business sectors, while bigger firms (250+ employees) contributed for 36.4% of overall employment. The pandemic has had a greater impact on SMEs than on large businesses, with an average sales loss of 26% versus 23% for large businesses. Government assistance appears to have benefited SMEs more than large corporations among the companies that do have overdraft facilities, indicating a successful application of policies to ease financial limitations for SMEs even when they receive help from the banking sector. The EIB Group contributed more than €16.35 billion to small and medium sized firms in 2022. SMEs were more quick in altering output during the pandemic, despite the intensity of the shock. In reaction to the crisis, one third of major enterprises altered their output or services, compared to 37% of SMEs. The criteria for defining the size of a business differ from country to country, with many countries having programs of business rate reduction and financial subsidy for SMEs. According to the European Commission, SMEs are enterprises which meet the following definition of staff headcount and either the turnover or balance sheet total definitions:
Company category Staff headcount Turnover Balance sheet total Medium sized < 250 ≤ €50 million ≤ €43 million Small < 50 ≤ €10 million ≤ €10 million Micro < 10 ≤ €2 million ≤ €2 million
In July 2011, the European Commission said it would open a consultation on the definition of SMEs in 2012. A consultation document was issued on 6 February 2018 and the consultation period closed on 6 May 2018. as of November 2019, no conclusions or responses have yet emerged. In Europe, there are three broad parameters that define SMEs:
Micro enterprises have up to 10 employees
Small enterprises have up to 50 employees
Medium sized enterprises have up to 250 employees. The European definition of SME follows: "The category of micro, small and medium sized enterprises (SMEs) is made up of enterprises which employ fewer than 250 persons and which have an annual turnover not exceeding 50 million euro, and/or an annual balance sheet total not exceeding 43 million euro." In order to prepare for an evaluation and revision of some features of the small and medium sized enterprises definition European Union established public consultation period from 6 February 2018 to 6 May 2018. Public consultation is available for all EU member country citizens and organizations. Especially, national and regional authorities, enterprises, business associations or organizations, venture capital providers, research and academic institutions, and individual citizens are expected as the main contributors. EU member states have had individual definitions of what constitutes an SME. For example, the definition in Germany had a limit of 255 employees, while in Belgium it could have been 100. The result is that while a Belgian business of 249 employees would be taxed at full rate in Belgium, it would nevertheless be eligible for SME subsidy under a European labelled programme. SMEs are a crucial element in the supplier network of large enterprises which are already on their way towards Industry 4.0. According to German economist Hans Heinrich Bass, "empirical research on SME as well as policies to promote SME have a long tradition in [West] Germany, dating back into the 19th century. Until the mid 20th century, most researchers considered SME as an impediment to further economic development and SME policies were thus designed in the framework of social policies. Only the Ordoliberalism school, the founding fathers of Germany's social market economy, discovered their strengths, considered SME as a solution to mid 20th century economic problems (mass unemployment, abuse of economic power), and laid the foundations for non selective (functional) industrial policies to promote SMEs." Only around 20% of European SMEs are substantially digitalized, compared to almost 50% of major businesses. Small and medium sized companies make up 56.2% of the non financial sector. Smaller companies account for more than 60% of the value contributed to the non financial sector in Belgium, Italy, and Spain, three of the nations worst hit by the COVID 19 pandemic. An estimated 50% of Europe's small firms may fail because they lack the substantial financial reserves required to weather the crisis. With around 338,000 functioning in Bulgaria in 2022, SMEs and mid caps are major contributors in the Bulgarian economy. They also employ over 75% of the workforce and create 65% of the economy's added value. The results of an EU survey conducted in 2021 suggest that during the pandemic, in countries with larger fiscal packages, SMEs were on average more likely to experience bankruptcy even after controlling for the size of the shock, the use of bank financing, and country and sector fixed effects. When policy assistance rises by 1% of GDP, the probabilities of bankruptcy for a SME are 2.7 times higher than for a non SME. Credit limitations are especially difficult for SMEs and new businesses to overcome. Credit constraints affect 24% of SMEs and 27% of young businesses. Poland
The SME sector in Poland generates almost 50% of the GDP, and out of that, for instance, in 2011, micro companies generated 29.6%, small companies 7.7%, and medium companies 10.4% (big companies 24.0%; other entities 16.5%, and revenues from customs duties and taxes generated 11.9%). In 2011, out of the total of 1,784,603 entities operating in Poland, merely 3,189 were classified as "large", so 1,781,414 were micro, small, or medium. SMEs employed 6.3 million people out of the total of 9.0 million of labour employed in the private sector. In Poland in 2011 there were 36.2 SMEs per 1,000 inhabitants. Nearly seven million people are employed by small businesses in Poland, which accounts for around half of the country's GDP, yet smaller businesses are less likely than larger ones to invest in strategies to combat climate change or boost energy efficiency. In October 2021, the Bank Ochrony rodowiska, a Polish bank that specializes in funding environmental protection initiatives received €75 million from the European Investment Bank (EIB) for these small enterprises. The Polish bank wants to use at least 50% of the loan for initiatives with a clear emphasis on tackling climate change, such improving building energy efficiency or turning to renewable energy sources like solar power. The money is set to be distributed across Poland, with around 80% of it projected to go to cohesive regions. Very small companies are called in the UK micro entities, which have simpler financial reporting requirements. Such micro enterprises must meet any two of the following criteria: balance sheet £316,000 or less; turnover £632,000 or less; employees 10 or less. Many small and medium sized businesses form part of the UK's currently growing Mittelstand, or Brittelstand'' as it is also sometimes named. These are businesses in Britain that are not only small or medium but also have a much broader set of values and more elastic definition. The Department for Business Innovation and Skills estimated that at the start of 2014, 99.3% of UK private sector businesses were SMEs, with their £1.6 trillion annual turnover accounting for 47% of private sector turnover. In order to support SMEs, the UK government set a target in 2010 "that 25% of government’s spend, either directly or in supply chains, goes to SMEs by 2015"; it achieved this by 2013.
Южная Африка. В Национальном законе о внесении поправок в Закон о малом бизнесе 2004 года микропредприятия в различных секторах, от производственного до розничного, определяются как предприятия с пятью или менее сотрудниками и оборотом до 100 000 ZAR (6 900 долларов США). В очень малых предприятиях работают от 6 до 20 человек, в малых предприятиях – от 21 до 50 человек. Верхний предел оборота для малого предприятия варьируется от 1 миллиона ZAR (69 200 долларов США) в сельскохозяйственном секторе до 13 миллионов ZAR (899 800 долларов США) в секторах общественного питания, размещения и других торговых секторах, а также в производственном секторе, с максимальным пределом в 32 миллиона ZAR (2 214 800 долларов США) в оптовой торговле. Средние предприятия обычно обеспечивают занятость до 200 человек (100 в сельскохозяйственном секторе), а максимальный оборот варьируется от 5 миллионов ZAR (346 100 долларов США) в сельскохозяйственном секторе до 51 миллиона ZAR (3 529 800 долларов США) в производственном секторе и 64 миллиона ZAR (4 429 600 долларов США) в оптовой торговле, торговых агентах и смежных услугах. Таким образом, исчерпывающее определение МСП в Южной Африке – это предприятие с одним или несколькими из следующих признаков:
Type of business with small personnel numbers
Small and medium sized enterprises (SMEs) or small and medium sized businesses (SMBs) are businesses whose personnel and revenue numbers fall below certain limits. The abbreviation "SME" is used by international organizations such as the World Bank, the OECD, European Union, the United Nations, and the World Trade Organization (WTO). In any given national economy, SMEs sometimes outnumber large companies by a wide margin and also employ many more people. For example, Australian SMEs makeup 98% of all Australian businesses, produce one third of the total GDP (gross domestic product) and employ 4.7 million people. In Chile, in the commercial year 2014, 98.5% of the firms were classified as SMEs. In Tunisia, the self employed workers alone account for about 28% of the total non farm employment, and firms with fewer than 100 employees account for about 62% of total employment. The United States' SMEs generate half of all U. S. jobs, but only 40% of GDP. Developing countries tend to have a larger share of small and medium sized enterprises. Although they create more new jobs than large firms, SMEs also suffer the majority of job destruction/contraction. According to the World Bank Group's 2021 FINDEX database, there is a $1.7 trillion funding gap for formal, women owned micro, small, and medium sized enterprises. Additionally, over 68% of small women owned firms lack access to finance.' Overview
SMEs are important for economic and social reasons, given the sector's role in employment. Due to their sizes, SMEs are heavily influenced by their Chief Executive Officer, a. k. a. CEOs. The CEOs of SMEs are often the founders, owners, and managers of the SMEs. The duties of the CEO in a SME mirror those of the CEO of a large company: the CEO needs to strategically allocate their time, energy, and assets to direct the SMEs. Typically, the CEO is the strategist, champion and leader for developing the SME or the prime reason for the business failing. At the employee level, Petrakis and Kostis (2012) explore the role of interpersonal trust and knowledge in the number of small and medium enterprises. They conclude that knowledge positively affects the number of SMEs, which in turn positively affects interpersonal trust. Note that the empirical results indicate that interpersonal trust does not affect the number of SMEs. Therefore, although knowledge development can reinforce SMEs, trust becomes widespread in a society when the number of SMEs is greater. Legal boundary on SMEs around the world
Multilateral organizations have been criticized for using one measure for all. The legal boundary of SMEs around the world vary, and below is a list of the upper limits of SMEs in some countries. Africa
African small businesses frequently struggle to get the cash they require to thrive. According to the SME Finance Forum, the formal financing gap for African SMEs averaged 17% of GDP across the 43 countries assessed in 2017. According to the World Bank, women own 58% of all MSMEs in Africa. The European Investment Bank's Banking in Africa survey, 2021 suggests that most of the responding banks had a non performing loan (NPL) ratio of at least 5%. NPLs account for at least 10% of the SME portfolio in approximately one third of African banks. Furthermore, 50% of the banks had at least 5% of their SME portfolio under the moratorium, and 40% had at least 5% of SME loans under some type of restructuring. Somalia
In Somalia, the term is SME (for "small, medium, and micro enterprises"); elsewhere in Africa, MSME stands for "micro, small, and medium enterprises". An SME is defined as a small business that has more than 30 employees but less than 250 employees. South Africa
In the National Small Business Amendment Act 2004, micro businesses in the different sectors, varying from the manufacturing to the retail sectors, are defined as businesses with five or fewer employees and a turnover of up to R100,000 ZAR ($6,900). Very small businesses employ between 6 and 20 employees, while small businesses employ between 21 and 50 employees. The upper limit for turnover in a small business varies from R1 million ($69,200) in the agricultural sector to R13 million ($899,800) in the catering, accommodations and other trade sectors as well as in the manufacturing sector, with a maximum of R32 million ($2,214,800) in the wholesale trade sector. Medium sized businesses''' usually employ up to 200 people (100 in the agricultural sector), and the maximum turnover varies from R5 million ($346,100) in the agricultural sector to R51 ($3,529,800) million in the manufacturing sector and R64 ($4,429,600) million in the wholesale trade, commercial agents and allied services sector. A comprehensive definition of an SME in South Africa is, therefore, an enterprise with one or more of the following characteristics:
Fewer than 200 employees,
Annual turnover of less than R64 million,
Capital assets of less than R10 million,
Direct managerial involvement by owners
Asia
SMEs account for nearly 90% of all company entities in developing Asian countries and are the principal private sector employers, supplying 50 80% of all jobs. SMEs cover 97 99% of all firms in South east Asia, contributing considerably to each country's GDP—for example, 46% in Singapore, 57% in Indonesia, and over 40% in other nations. 98% of business establishments in Hong Kong are defined as SMEs and employed 45% of the work force. India
India defines Micro, Small and Medium Enterprises based on dual criteria of investment and turnover. This definition is provided in Section 7 of Micro, Small & Medium Enterprises Development Act, 2006 (MSMED Act) and was notified in September 2006. The Act provides for the classification of enterprises based on their investment size and the nature of the activity undertaken by that enterprise. As per MSMED Act, enterprises are classified into two categories manufacturing enterprises and service enterprises. For each of these categories, a definition is given to explain what constitutes a micro enterprise or a small enterprise or a medium enterprise. If an enterprise does not fall under the above categories, it would be considered a large scale enterprise. In June 2020, India updated the definition as follows:
+Sr NoClassificationCriteria (in ₹)1Micro EnterprisesInvestment <= 1 cr and Turnover <= 5 cr2Small EnterprisesInvestment <= 10 cr and Turnover <= 50 cr3Medium EnterprisesInvestment <= 50 cr and Turnover <= 250 cr
Businesses that are declared as MSMEs and within specific sectors and criteria can then apply for "priority sector" lending to help with business expenses; banks have annual targets set by the Prime Minister's Task Force on MSMEs for year on year increases of lending to various categories of MSMEs. MSME is considered a key contributor to India's growth and contributes 48% to India's total export. Indonesia
In Indonesia, the government defines micro, small, and medium enterprises (Indonesian: usaha mikro kecil menengah, UMKM) based on their assets and revenues according to Law No. 20/2008:
Type Maximum assets, Rp Gross Revenue, Rp Number of Employee Statistics Indonesia Micro maximum 50,000,000 maximum 300,000,000 1 4 Small 50,000,000 500,000,000 300,000,000 2,500,000,000 5 9 Medium 500,000,000 10,000,000,000 2,500,000,000 50,000,000,000 20 99 Large >10,000,000,000 >50,000,000,000 >99
An annual revenue of Rp 50 billion is approximately equal to US$3.1 million as of April 2024. Despite their significant contribution to GDP and job creation, Indonesian MSMEs confront a number of obstacles. One of the most significant is capital access: 60 70 percent of MSMEs lack access to financial institutions and their funding options. Other restrictions include inadequate infrastructure, difficulties acquiring company licences and permissions, high tax rates, political insecurity, and improving their brand image in the digital era. 21st century businesses strategically use both their websites and social media in order to advertise their products and control their branding. Quality content on both information streams will positively affect branding and attract customers. The People's Business Credit (Kredit Usaha Rakyat, or KUR [id]) was established in 2007 by President Yudhoyono to extend credit to businesses that were considered "feasible but not bankable". Bank Rakyat Indonesia conducts more than half of KUR lending nationwide. In Jakarta, the capital city of Indonesia, 529 MSMEs with the potential to be funded have been identified by Bank Indonesia. Economy Sector Number of Companies Processing Industry 151 Health Services and Social Activities 1 Rental leasing services without option rights, employment, travel agents and other business support 9 Professional, Scientific And Technical Services 11 Other Service Activities 21 Arts, Entertainment And Recreation 1 Construction 2 Water Procurement, Waste Management And Recycling, Waste And Garbage Disposal And Cleaning 1 Provision of Accommodation and Provision of Food and Drink 80 Wholesale and retail trade of car and motorcycle repair and maintenance 236 Agriculture, Forestry, and Fisheries 16
Philippines
According to the Department of Trade and Industry's 2020 List of Establishments report, there are 957,620 registered business enterprises operating in the country, composed of 99.51% MSMEs and 0.49% large firms. The MSMEs consist of 88.77% microenterprises, 10.25% small enterprises, and 0.49% medium enterprises. Among the top industry sectors include (1) wholesale and retail trade; repair of motor vehicles and motorcycles (445,386); (2) accommodation and food service activities (134,046); (3) manufacturing (110,916); (4) other service activities (62,376); and (5) financial and insurance activities (45,558) which accounted for about 83.77% of the total number of MSME establishments. Prior to the pandemic, MSMEs generated more than 5.38 million jobs or 62.66% of the country's total employment with a 29.38% share from micro enterprises followed by 25.78% and 7.50% for small and medium enterprises. Europe
European Union
Small companies are important to the European economy as they account for 99.8% of non financial enterprises in the European Union (EU) and employ two thirds of the workforce in the EU. The majority of European firms are small and medium sized enterprises (SMEs), employing over 100 million people. Due to the COVID 19 pandemic, a large majority of SMEs saw a decline in revenue during 2020 2021. Medium sized businesses (or mid caps) play an important role in the European economy, accounting for a considerable part of employment and wealth production. According to a recent European Commission analysis, mid cap companies (250 3000 people) make up about 17% of total employment and 21% of turnover in the EU27 business sector. Micro firms (with fewer than nine employees) employ 38% of the total workforce, while SMEs with fewer than 250 employees account for 34.4%. Larger (XL) firms with 3,000 or more employees account for 10.1% of overall employment in EU business sectors. According to Eurostat SBS statistics, in 2021, tiny enterprises (0 9 workers) and SMEs (excluding micro firms) employed around 30% and 34.5% of the entire workforce in EU27 business sectors, while bigger firms (250+ employees) contributed for 36.4% of overall employment. The pandemic has had a greater impact on SMEs than on large businesses, with an average sales loss of 26% versus 23% for large businesses. Government assistance appears to have benefited SMEs more than large corporations among the companies that do have overdraft facilities, indicating a successful application of policies to ease financial limitations for SMEs even when they receive help from the banking sector. The EIB Group contributed more than €16.35 billion to small and medium sized firms in 2022. SMEs were more quick in altering output during the pandemic, despite the intensity of the shock. In reaction to the crisis, one third of major enterprises altered their output or services, compared to 37% of SMEs. The criteria for defining the size of a business differ from country to country, with many countries having programs of business rate reduction and financial subsidy for SMEs. According to the European Commission, SMEs are enterprises which meet the following definition of staff headcount and either the turnover or balance sheet total definitions:
Company category Staff headcount Turnover Balance sheet total Medium sized < 250 ≤ €50 million ≤ €43 million Small < 50 ≤ €10 million ≤ €10 million Micro < 10 ≤ €2 million ≤ €2 million
In July 2011, the European Commission said it would open a consultation on the definition of SMEs in 2012. A consultation document was issued on 6 February 2018 and the consultation period closed on 6 May 2018. as of November 2019, no conclusions or responses have yet emerged. In Europe, there are three broad parameters that define SMEs:
Micro enterprises have up to 10 employees
Small enterprises have up to 50 employees
Medium sized enterprises have up to 250 employees. The European definition of SME follows: "The category of micro, small and medium sized enterprises (SMEs) is made up of enterprises which employ fewer than 250 persons and which have an annual turnover not exceeding 50 million euro, and/or an annual balance sheet total not exceeding 43 million euro." In order to prepare for an evaluation and revision of some features of the small and medium sized enterprises definition European Union established public consultation period from 6 February 2018 to 6 May 2018. Public consultation is available for all EU member country citizens and organizations. Especially, national and regional authorities, enterprises, business associations or organizations, venture capital providers, research and academic institutions, and individual citizens are expected as the main contributors. EU member states have had individual definitions of what constitutes an SME. For example, the definition in Germany had a limit of 255 employees, while in Belgium it could have been 100. The result is that while a Belgian business of 249 employees would be taxed at full rate in Belgium, it would nevertheless be eligible for SME subsidy under a European labelled programme. SMEs are a crucial element in the supplier network of large enterprises which are already on their way towards Industry 4.0. According to German economist Hans Heinrich Bass, "empirical research on SME as well as policies to promote SME have a long tradition in [West] Germany, dating back into the 19th century. Until the mid 20th century, most researchers considered SME as an impediment to further economic development and SME policies were thus designed in the framework of social policies. Only the Ordoliberalism school, the founding fathers of Germany's social market economy, discovered their strengths, considered SME as a solution to mid 20th century economic problems (mass unemployment, abuse of economic power), and laid the foundations for non selective (functional) industrial policies to promote SMEs." Only around 20% of European SMEs are substantially digitalized, compared to almost 50% of major businesses. Small and medium sized companies make up 56.2% of the non financial sector. Smaller companies account for more than 60% of the value contributed to the non financial sector in Belgium, Italy, and Spain, three of the nations worst hit by the COVID 19 pandemic. An estimated 50% of Europe's small firms may fail because they lack the substantial financial reserves required to weather the crisis. With around 338,000 functioning in Bulgaria in 2022, SMEs and mid caps are major contributors in the Bulgarian economy. They also employ over 75% of the workforce and create 65% of the economy's added value. The results of an EU survey conducted in 2021 suggest that during the pandemic, in countries with larger fiscal packages, SMEs were on average more likely to experience bankruptcy even after controlling for the size of the shock, the use of bank financing, and country and sector fixed effects. When policy assistance rises by 1% of GDP, the probabilities of bankruptcy for a SME are 2.7 times higher than for a non SME. Credit limitations are especially difficult for SMEs and new businesses to overcome. Credit constraints affect 24% of SMEs and 27% of young businesses. Poland
The SME sector in Poland generates almost 50% of the GDP, and out of that, for instance, in 2011, micro companies generated 29.6%, small companies 7.7%, and medium companies 10.4% (big companies 24.0%; other entities 16.5%, and revenues from customs duties and taxes generated 11.9%). In 2011, out of the total of 1,784,603 entities operating in Poland, merely 3,189 were classified as "large", so 1,781,414 were micro, small, or medium. SMEs employed 6.3 million people out of the total of 9.0 million of labour employed in the private sector. In Poland in 2011 there were 36.2 SMEs per 1,000 inhabitants. Nearly seven million people are employed by small businesses in Poland, which accounts for around half of the country's GDP, yet smaller businesses are less likely than larger ones to invest in strategies to combat climate change or boost energy efficiency. In October 2021, the Bank Ochrony rodowiska, a Polish bank that specializes in funding environmental protection initiatives received €75 million from the European Investment Bank (EIB) for these small enterprises. The Polish bank wants to use at least 50% of the loan for initiatives with a clear emphasis on tackling climate change, such improving building energy efficiency or turning to renewable energy sources like solar power. The money is set to be distributed across Poland, with around 80% of it projected to go to cohesive regions. Very small companies are called in the UK micro entities, which have simpler financial reporting requirements. Such micro enterprises must meet any two of the following criteria: balance sheet £316,000 or less; turnover £632,000 or less; employees 10 or less. Many small and medium sized businesses form part of the UK's currently growing Mittelstand, or Brittelstand'' as it is also sometimes named. These are businesses in Britain that are not only small or medium but also have a much broader set of values and more elastic definition. The Department for Business Innovation and Skills estimated that at the start of 2014, 99.3% of UK private sector businesses were SMEs, with their £1.6 trillion annual turnover accounting for 47% of private sector turnover. In order to support SMEs, the UK government set a target in 2010 "that 25% of government’s spend, either directly or in supply chains, goes to SMEs by 2015"; it achieved this by 2013.
Small and medium sized enterprises (SMEs) or small and medium sized businesses (SMBs) are businesses whose personnel and revenue numbers fall below certain limits. The abbreviation "SME" is used by international organizations such as the World Bank, the OECD, European Union, the United Nations, and the World Trade Organization (WTO). In any given national economy, SMEs sometimes outnumber large companies by a wide margin and also employ many more people. For example, Australian SMEs makeup 98% of all Australian businesses, produce one third of the total GDP (gross domestic product) and employ 4.7 million people. In Chile, in the commercial year 2014, 98.5% of the firms were classified as SMEs. In Tunisia, the self employed workers alone account for about 28% of the total non farm employment, and firms with fewer than 100 employees account for about 62% of total employment. The United States' SMEs generate half of all U. S. jobs, but only 40% of GDP. Developing countries tend to have a larger share of small and medium sized enterprises. Although they create more new jobs than large firms, SMEs also suffer the majority of job destruction/contraction. According to the World Bank Group's 2021 FINDEX database, there is a $1.7 trillion funding gap for formal, women owned micro, small, and medium sized enterprises. Additionally, over 68% of small women owned firms lack access to finance.' Overview
SMEs are important for economic and social reasons, given the sector's role in employment. Due to their sizes, SMEs are heavily influenced by their Chief Executive Officer, a. k. a. CEOs. The CEOs of SMEs are often the founders, owners, and managers of the SMEs. The duties of the CEO in a SME mirror those of the CEO of a large company: the CEO needs to strategically allocate their time, energy, and assets to direct the SMEs. Typically, the CEO is the strategist, champion and leader for developing the SME or the prime reason for the business failing. At the employee level, Petrakis and Kostis (2012) explore the role of interpersonal trust and knowledge in the number of small and medium enterprises. They conclude that knowledge positively affects the number of SMEs, which in turn positively affects interpersonal trust. Note that the empirical results indicate that interpersonal trust does not affect the number of SMEs. Therefore, although knowledge development can reinforce SMEs, trust becomes widespread in a society when the number of SMEs is greater. Legal boundary on SMEs around the world
Multilateral organizations have been criticized for using one measure for all. The legal boundary of SMEs around the world vary, and below is a list of the upper limits of SMEs in some countries. Africa
African small businesses frequently struggle to get the cash they require to thrive. According to the SME Finance Forum, the formal financing gap for African SMEs averaged 17% of GDP across the 43 countries assessed in 2017. According to the World Bank, women own 58% of all MSMEs in Africa. The European Investment Bank's Banking in Africa survey, 2021 suggests that most of the responding banks had a non performing loan (NPL) ratio of at least 5%. NPLs account for at least 10% of the SME portfolio in approximately one third of African banks. Furthermore, 50% of the banks had at least 5% of their SME portfolio under the moratorium, and 40% had at least 5% of SME loans under some type of restructuring. Somalia
In Somalia, the term is SME (for "small, medium, and micro enterprises"); elsewhere in Africa, MSME stands for "micro, small, and medium enterprises". An SME is defined as a small business that has more than 30 employees but less than 250 employees. South Africa
In the National Small Business Amendment Act 2004, micro businesses in the different sectors, varying from the manufacturing to the retail sectors, are defined as businesses with five or fewer employees and a turnover of up to R100,000 ZAR ($6,900). Very small businesses employ between 6 and 20 employees, while small businesses employ between 21 and 50 employees. The upper limit for turnover in a small business varies from R1 million ($69,200) in the agricultural sector to R13 million ($899,800) in the catering, accommodations and other trade sectors as well as in the manufacturing sector, with a maximum of R32 million ($2,214,800) in the wholesale trade sector. Medium sized businesses''' usually employ up to 200 people (100 in the agricultural sector), and the maximum turnover varies from R5 million ($346,100) in the agricultural sector to R51 ($3,529,800) million in the manufacturing sector and R64 ($4,429,600) million in the wholesale trade, commercial agents and allied services sector. A comprehensive definition of an SME in South Africa is, therefore, an enterprise with one or more of the following characteristics:
Fewer than 200 employees,
Annual turnover of less than R64 million,
Capital assets of less than R10 million,
Direct managerial involvement by owners
Asia
SMEs account for nearly 90% of all company entities in developing Asian countries and are the principal private sector employers, supplying 50 80% of all jobs. SMEs cover 97 99% of all firms in South east Asia, contributing considerably to each country's GDP—for example, 46% in Singapore, 57% in Indonesia, and over 40% in other nations. 98% of business establishments in Hong Kong are defined as SMEs and employed 45% of the work force. India
India defines Micro, Small and Medium Enterprises based on dual criteria of investment and turnover. This definition is provided in Section 7 of Micro, Small & Medium Enterprises Development Act, 2006 (MSMED Act) and was notified in September 2006. The Act provides for the classification of enterprises based on their investment size and the nature of the activity undertaken by that enterprise. As per MSMED Act, enterprises are classified into two categories manufacturing enterprises and service enterprises. For each of these categories, a definition is given to explain what constitutes a micro enterprise or a small enterprise or a medium enterprise. If an enterprise does not fall under the above categories, it would be considered a large scale enterprise. In June 2020, India updated the definition as follows:
+Sr NoClassificationCriteria (in ₹)1Micro EnterprisesInvestment <= 1 cr and Turnover <= 5 cr2Small EnterprisesInvestment <= 10 cr and Turnover <= 50 cr3Medium EnterprisesInvestment <= 50 cr and Turnover <= 250 cr
Businesses that are declared as MSMEs and within specific sectors and criteria can then apply for "priority sector" lending to help with business expenses; banks have annual targets set by the Prime Minister's Task Force on MSMEs for year on year increases of lending to various categories of MSMEs. MSME is considered a key contributor to India's growth and contributes 48% to India's total export. Indonesia
In Indonesia, the government defines micro, small, and medium enterprises (Indonesian: usaha mikro kecil menengah, UMKM) based on their assets and revenues according to Law No. 20/2008:
Type Maximum assets, Rp Gross Revenue, Rp Number of Employee Statistics Indonesia Micro maximum 50,000,000 maximum 300,000,000 1 4 Small 50,000,000 500,000,000 300,000,000 2,500,000,000 5 9 Medium 500,000,000 10,000,000,000 2,500,000,000 50,000,000,000 20 99 Large >10,000,000,000 >50,000,000,000 >99
An annual revenue of Rp 50 billion is approximately equal to US$3.1 million as of April 2024. Despite their significant contribution to GDP and job creation, Indonesian MSMEs confront a number of obstacles. One of the most significant is capital access: 60 70 percent of MSMEs lack access to financial institutions and their funding options. Other restrictions include inadequate infrastructure, difficulties acquiring company licences and permissions, high tax rates, political insecurity, and improving their brand image in the digital era. 21st century businesses strategically use both their websites and social media in order to advertise their products and control their branding. Quality content on both information streams will positively affect branding and attract customers. The People's Business Credit (Kredit Usaha Rakyat, or KUR [id]) was established in 2007 by President Yudhoyono to extend credit to businesses that were considered "feasible but not bankable". Bank Rakyat Indonesia conducts more than half of KUR lending nationwide. In Jakarta, the capital city of Indonesia, 529 MSMEs with the potential to be funded have been identified by Bank Indonesia. Economy Sector Number of Companies Processing Industry 151 Health Services and Social Activities 1 Rental leasing services without option rights, employment, travel agents and other business support 9 Professional, Scientific And Technical Services 11 Other Service Activities 21 Arts, Entertainment And Recreation 1 Construction 2 Water Procurement, Waste Management And Recycling, Waste And Garbage Disposal And Cleaning 1 Provision of Accommodation and Provision of Food and Drink 80 Wholesale and retail trade of car and motorcycle repair and maintenance 236 Agriculture, Forestry, and Fisheries 16
Philippines
According to the Department of Trade and Industry's 2020 List of Establishments report, there are 957,620 registered business enterprises operating in the country, composed of 99.51% MSMEs and 0.49% large firms. The MSMEs consist of 88.77% microenterprises, 10.25% small enterprises, and 0.49% medium enterprises. Among the top industry sectors include (1) wholesale and retail trade; repair of motor vehicles and motorcycles (445,386); (2) accommodation and food service activities (134,046); (3) manufacturing (110,916); (4) other service activities (62,376); and (5) financial and insurance activities (45,558) which accounted for about 83.77% of the total number of MSME establishments. Prior to the pandemic, MSMEs generated more than 5.38 million jobs or 62.66% of the country's total employment with a 29.38% share from micro enterprises followed by 25.78% and 7.50% for small and medium enterprises. Europe
European Union
Small companies are important to the European economy as they account for 99.8% of non financial enterprises in the European Union (EU) and employ two thirds of the workforce in the EU. The majority of European firms are small and medium sized enterprises (SMEs), employing over 100 million people. Due to the COVID 19 pandemic, a large majority of SMEs saw a decline in revenue during 2020 2021. Medium sized businesses (or mid caps) play an important role in the European economy, accounting for a considerable part of employment and wealth production. According to a recent European Commission analysis, mid cap companies (250 3000 people) make up about 17% of total employment and 21% of turnover in the EU27 business sector. Micro firms (with fewer than nine employees) employ 38% of the total workforce, while SMEs with fewer than 250 employees account for 34.4%. Larger (XL) firms with 3,000 or more employees account for 10.1% of overall employment in EU business sectors. According to Eurostat SBS statistics, in 2021, tiny enterprises (0 9 workers) and SMEs (excluding micro firms) employed around 30% and 34.5% of the entire workforce in EU27 business sectors, while bigger firms (250+ employees) contributed for 36.4% of overall employment. The pandemic has had a greater impact on SMEs than on large businesses, with an average sales loss of 26% versus 23% for large businesses. Government assistance appears to have benefited SMEs more than large corporations among the companies that do have overdraft facilities, indicating a successful application of policies to ease financial limitations for SMEs even when they receive help from the banking sector. The EIB Group contributed more than €16.35 billion to small and medium sized firms in 2022. SMEs were more quick in altering output during the pandemic, despite the intensity of the shock. In reaction to the crisis, one third of major enterprises altered their output or services, compared to 37% of SMEs. The criteria for defining the size of a business differ from country to country, with many countries having programs of business rate reduction and financial subsidy for SMEs. According to the European Commission, SMEs are enterprises which meet the following definition of staff headcount and either the turnover or balance sheet total definitions:
Company category Staff headcount Turnover Balance sheet total Medium sized < 250 ≤ €50 million ≤ €43 million Small < 50 ≤ €10 million ≤ €10 million Micro < 10 ≤ €2 million ≤ €2 million
In July 2011, the European Commission said it would open a consultation on the definition of SMEs in 2012. A consultation document was issued on 6 February 2018 and the consultation period closed on 6 May 2018. as of November 2019, no conclusions or responses have yet emerged. In Europe, there are three broad parameters that define SMEs:
Micro enterprises have up to 10 employees
Small enterprises have up to 50 employees
Medium sized enterprises have up to 250 employees. The European definition of SME follows: "The category of micro, small and medium sized enterprises (SMEs) is made up of enterprises which employ fewer than 250 persons and which have an annual turnover not exceeding 50 million euro, and/or an annual balance sheet total not exceeding 43 million euro." In order to prepare for an evaluation and revision of some features of the small and medium sized enterprises definition European Union established public consultation period from 6 February 2018 to 6 May 2018. Public consultation is available for all EU member country citizens and organizations. Especially, national and regional authorities, enterprises, business associations or organizations, venture capital providers, research and academic institutions, and individual citizens are expected as the main contributors. EU member states have had individual definitions of what constitutes an SME. For example, the definition in Germany had a limit of 255 employees, while in Belgium it could have been 100. The result is that while a Belgian business of 249 employees would be taxed at full rate in Belgium, it would nevertheless be eligible for SME subsidy under a European labelled programme. SMEs are a crucial element in the supplier network of large enterprises which are already on their way towards Industry 4.0. According to German economist Hans Heinrich Bass, "empirical research on SME as well as policies to promote SME have a long tradition in [West] Germany, dating back into the 19th century. Until the mid 20th century, most researchers considered SME as an impediment to further economic development and SME policies were thus designed in the framework of social policies. Only the Ordoliberalism school, the founding fathers of Germany's social market economy, discovered their strengths, considered SME as a solution to mid 20th century economic problems (mass unemployment, abuse of economic power), and laid the foundations for non selective (functional) industrial policies to promote SMEs." Only around 20% of European SMEs are substantially digitalized, compared to almost 50% of major businesses. Small and medium sized companies make up 56.2% of the non financial sector. Smaller companies account for more than 60% of the value contributed to the non financial sector in Belgium, Italy, and Spain, three of the nations worst hit by the COVID 19 pandemic. An estimated 50% of Europe's small firms may fail because they lack the substantial financial reserves required to weather the crisis. With around 338,000 functioning in Bulgaria in 2022, SMEs and mid caps are major contributors in the Bulgarian economy. They also employ over 75% of the workforce and create 65% of the economy's added value. The results of an EU survey conducted in 2021 suggest that during the pandemic, in countries with larger fiscal packages, SMEs were on average more likely to experience bankruptcy even after controlling for the size of the shock, the use of bank financing, and country and sector fixed effects. When policy assistance rises by 1% of GDP, the probabilities of bankruptcy for a SME are 2.7 times higher than for a non SME. Credit limitations are especially difficult for SMEs and new businesses to overcome. Credit constraints affect 24% of SMEs and 27% of young businesses. Poland
The SME sector in Poland generates almost 50% of the GDP, and out of that, for instance, in 2011, micro companies generated 29.6%, small companies 7.7%, and medium companies 10.4% (big companies 24.0%; other entities 16.5%, and revenues from customs duties and taxes generated 11.9%). In 2011, out of the total of 1,784,603 entities operating in Poland, merely 3,189 were classified as "large", so 1,781,414 were micro, small, or medium. SMEs employed 6.3 million people out of the total of 9.0 million of labour employed in the private sector. In Poland in 2011 there were 36.2 SMEs per 1,000 inhabitants. Nearly seven million people are employed by small businesses in Poland, which accounts for around half of the country's GDP, yet smaller businesses are less likely than larger ones to invest in strategies to combat climate change or boost energy efficiency. In October 2021, the Bank Ochrony rodowiska, a Polish bank that specializes in funding environmental protection initiatives received €75 million from the European Investment Bank (EIB) for these small enterprises. The Polish bank wants to use at least 50% of the loan for initiatives with a clear emphasis on tackling climate change, such improving building energy efficiency or turning to renewable energy sources like solar power. The money is set to be distributed across Poland, with around 80% of it projected to go to cohesive regions. Very small companies are called in the UK micro entities, which have simpler financial reporting requirements. Such micro enterprises must meet any two of the following criteria: balance sheet £316,000 or less; turnover £632,000 or less; employees 10 or less. Many small and medium sized businesses form part of the UK's currently growing Mittelstand, or Brittelstand'' as it is also sometimes named. These are businesses in Britain that are not only small or medium but also have a much broader set of values and more elastic definition. The Department for Business Innovation and Skills estimated that at the start of 2014, 99.3% of UK private sector businesses were SMEs, with their £1.6 trillion annual turnover accounting for 47% of private sector turnover. In order to support SMEs, the UK government set a target in 2010 "that 25% of government’s spend, either directly or in supply chains, goes to SMEs by 2015"; it achieved this by 2013.
* Менее 200 сотрудников,
* Годовой оборот менее 64 миллионов ZAR,
* Основные средства менее 10 миллионов ZAR,
* Непосредственное участие владельцев в управлении.
Type of business with small personnel numbers
Small and medium sized enterprises (SMEs) or small and medium sized businesses (SMBs) are businesses whose personnel and revenue numbers fall below certain limits. The abbreviation "SME" is used by international organizations such as the World Bank, the OECD, European Union, the United Nations, and the World Trade Organization (WTO). In any given national economy, SMEs sometimes outnumber large companies by a wide margin and also employ many more people. For example, Australian SMEs makeup 98% of all Australian businesses, produce one third of the total GDP (gross domestic product) and employ 4.7 million people. In Chile, in the commercial year 2014, 98.5% of the firms were classified as SMEs. In Tunisia, the self employed workers alone account for about 28% of the total non farm employment, and firms with fewer than 100 employees account for about 62% of total employment. The United States' SMEs generate half of all U. S. jobs, but only 40% of GDP. Developing countries tend to have a larger share of small and medium sized enterprises. Although they create more new jobs than large firms, SMEs also suffer the majority of job destruction/contraction. According to the World Bank Group's 2021 FINDEX database, there is a $1.7 trillion funding gap for formal, women owned micro, small, and medium sized enterprises. Additionally, over 68% of small women owned firms lack access to finance.' Overview
SMEs are important for economic and social reasons, given the sector's role in employment. Due to their sizes, SMEs are heavily influenced by their Chief Executive Officer, a. k. a. CEOs. The CEOs of SMEs are often the founders, owners, and managers of the SMEs. The duties of the CEO in a SME mirror those of the CEO of a large company: the CEO needs to strategically allocate their time, energy, and assets to direct the SMEs. Typically, the CEO is the strategist, champion and leader for developing the SME or the prime reason for the business failing. At the employee level, Petrakis and Kostis (2012) explore the role of interpersonal trust and knowledge in the number of small and medium enterprises. They conclude that knowledge positively affects the number of SMEs, which in turn positively affects interpersonal trust. Note that the empirical results indicate that interpersonal trust does not affect the number of SMEs. Therefore, although knowledge development can reinforce SMEs, trust becomes widespread in a society when the number of SMEs is greater. Legal boundary on SMEs around the world
Multilateral organizations have been criticized for using one measure for all. The legal boundary of SMEs around the world vary, and below is a list of the upper limits of SMEs in some countries. Africa
African small businesses frequently struggle to get the cash they require to thrive. According to the SME Finance Forum, the formal financing gap for African SMEs averaged 17% of GDP across the 43 countries assessed in 2017. According to the World Bank, women own 58% of all MSMEs in Africa. The European Investment Bank's Banking in Africa survey, 2021 suggests that most of the responding banks had a non performing loan (NPL) ratio of at least 5%. NPLs account for at least 10% of the SME portfolio in approximately one third of African banks. Furthermore, 50% of the banks had at least 5% of their SME portfolio under the moratorium, and 40% had at least 5% of SME loans under some type of restructuring. Somalia
In Somalia, the term is SME (for "small, medium, and micro enterprises"); elsewhere in Africa, MSME stands for "micro, small, and medium enterprises". An SME is defined as a small business that has more than 30 employees but less than 250 employees. South Africa
In the National Small Business Amendment Act 2004, micro businesses in the different sectors, varying from the manufacturing to the retail sectors, are defined as businesses with five or fewer employees and a turnover of up to R100,000 ZAR ($6,900). Very small businesses employ between 6 and 20 employees, while small businesses employ between 21 and 50 employees. The upper limit for turnover in a small business varies from R1 million ($69,200) in the agricultural sector to R13 million ($899,800) in the catering, accommodations and other trade sectors as well as in the manufacturing sector, with a maximum of R32 million ($2,214,800) in the wholesale trade sector. Medium sized businesses''' usually employ up to 200 people (100 in the agricultural sector), and the maximum turnover varies from R5 million ($346,100) in the agricultural sector to R51 ($3,529,800) million in the manufacturing sector and R64 ($4,429,600) million in the wholesale trade, commercial agents and allied services sector. A comprehensive definition of an SME in South Africa is, therefore, an enterprise with one or more of the following characteristics:
Fewer than 200 employees,
Annual turnover of less than R64 million,
Capital assets of less than R10 million,
Direct managerial involvement by owners
Asia
SMEs account for nearly 90% of all company entities in developing Asian countries and are the principal private sector employers, supplying 50 80% of all jobs. SMEs cover 97 99% of all firms in South east Asia, contributing considerably to each country's GDP—for example, 46% in Singapore, 57% in Indonesia, and over 40% in other nations. 98% of business establishments in Hong Kong are defined as SMEs and employed 45% of the work force. India
India defines Micro, Small and Medium Enterprises based on dual criteria of investment and turnover. This definition is provided in Section 7 of Micro, Small & Medium Enterprises Development Act, 2006 (MSMED Act) and was notified in September 2006. The Act provides for the classification of enterprises based on their investment size and the nature of the activity undertaken by that enterprise. As per MSMED Act, enterprises are classified into two categories manufacturing enterprises and service enterprises. For each of these categories, a definition is given to explain what constitutes a micro enterprise or a small enterprise or a medium enterprise. If an enterprise does not fall under the above categories, it would be considered a large scale enterprise. In June 2020, India updated the definition as follows:
+Sr NoClassificationCriteria (in ₹)1Micro EnterprisesInvestment <= 1 cr and Turnover <= 5 cr2Small EnterprisesInvestment <= 10 cr and Turnover <= 50 cr3Medium EnterprisesInvestment <= 50 cr and Turnover <= 250 cr
Businesses that are declared as MSMEs and within specific sectors and criteria can then apply for "priority sector" lending to help with business expenses; banks have annual targets set by the Prime Minister's Task Force on MSMEs for year on year increases of lending to various categories of MSMEs. MSME is considered a key contributor to India's growth and contributes 48% to India's total export. Indonesia
In Indonesia, the government defines micro, small, and medium enterprises (Indonesian: usaha mikro kecil menengah, UMKM) based on their assets and revenues according to Law No. 20/2008:
Type Maximum assets, Rp Gross Revenue, Rp Number of Employee Statistics Indonesia Micro maximum 50,000,000 maximum 300,000,000 1 4 Small 50,000,000 500,000,000 300,000,000 2,500,000,000 5 9 Medium 500,000,000 10,000,000,000 2,500,000,000 50,000,000,000 20 99 Large >10,000,000,000 >50,000,000,000 >99
An annual revenue of Rp 50 billion is approximately equal to US$3.1 million as of April 2024. Despite their significant contribution to GDP and job creation, Indonesian MSMEs confront a number of obstacles. One of the most significant is capital access: 60 70 percent of MSMEs lack access to financial institutions and their funding options. Other restrictions include inadequate infrastructure, difficulties acquiring company licences and permissions, high tax rates, political insecurity, and improving their brand image in the digital era. 21st century businesses strategically use both their websites and social media in order to advertise their products and control their branding. Quality content on both information streams will positively affect branding and attract customers. The People's Business Credit (Kredit Usaha Rakyat, or KUR [id]) was established in 2007 by President Yudhoyono to extend credit to businesses that were considered "feasible but not bankable". Bank Rakyat Indonesia conducts more than half of KUR lending nationwide. In Jakarta, the capital city of Indonesia, 529 MSMEs with the potential to be funded have been identified by Bank Indonesia. Economy Sector Number of Companies Processing Industry 151 Health Services and Social Activities 1 Rental leasing services without option rights, employment, travel agents and other business support 9 Professional, Scientific And Technical Services 11 Other Service Activities 21 Arts, Entertainment And Recreation 1 Construction 2 Water Procurement, Waste Management And Recycling, Waste And Garbage Disposal And Cleaning 1 Provision of Accommodation and Provision of Food and Drink 80 Wholesale and retail trade of car and motorcycle repair and maintenance 236 Agriculture, Forestry, and Fisheries 16
Philippines
According to the Department of Trade and Industry's 2020 List of Establishments report, there are 957,620 registered business enterprises operating in the country, composed of 99.51% MSMEs and 0.49% large firms. The MSMEs consist of 88.77% microenterprises, 10.25% small enterprises, and 0.49% medium enterprises. Among the top industry sectors include (1) wholesale and retail trade; repair of motor vehicles and motorcycles (445,386); (2) accommodation and food service activities (134,046); (3) manufacturing (110,916); (4) other service activities (62,376); and (5) financial and insurance activities (45,558) which accounted for about 83.77% of the total number of MSME establishments. Prior to the pandemic, MSMEs generated more than 5.38 million jobs or 62.66% of the country's total employment with a 29.38% share from micro enterprises followed by 25.78% and 7.50% for small and medium enterprises. Europe
European Union
Small companies are important to the European economy as they account for 99.8% of non financial enterprises in the European Union (EU) and employ two thirds of the workforce in the EU. The majority of European firms are small and medium sized enterprises (SMEs), employing over 100 million people. Due to the COVID 19 pandemic, a large majority of SMEs saw a decline in revenue during 2020 2021. Medium sized businesses (or mid caps) play an important role in the European economy, accounting for a considerable part of employment and wealth production. According to a recent European Commission analysis, mid cap companies (250 3000 people) make up about 17% of total employment and 21% of turnover in the EU27 business sector. Micro firms (with fewer than nine employees) employ 38% of the total workforce, while SMEs with fewer than 250 employees account for 34.4%. Larger (XL) firms with 3,000 or more employees account for 10.1% of overall employment in EU business sectors. According to Eurostat SBS statistics, in 2021, tiny enterprises (0 9 workers) and SMEs (excluding micro firms) employed around 30% and 34.5% of the entire workforce in EU27 business sectors, while bigger firms (250+ employees) contributed for 36.4% of overall employment. The pandemic has had a greater impact on SMEs than on large businesses, with an average sales loss of 26% versus 23% for large businesses. Government assistance appears to have benefited SMEs more than large corporations among the companies that do have overdraft facilities, indicating a successful application of policies to ease financial limitations for SMEs even when they receive help from the banking sector. The EIB Group contributed more than €16.35 billion to small and medium sized firms in 2022. SMEs were more quick in altering output during the pandemic, despite the intensity of the shock. In reaction to the crisis, one third of major enterprises altered their output or services, compared to 37% of SMEs. The criteria for defining the size of a business differ from country to country, with many countries having programs of business rate reduction and financial subsidy for SMEs. According to the European Commission, SMEs are enterprises which meet the following definition of staff headcount and either the turnover or balance sheet total definitions:
Company category Staff headcount Turnover Balance sheet total Medium sized < 250 ≤ €50 million ≤ €43 million Small < 50 ≤ €10 million ≤ €10 million Micro < 10 ≤ €2 million ≤ €2 million
In July 2011, the European Commission said it would open a consultation on the definition of SMEs in 2012. A consultation document was issued on 6 February 2018 and the consultation period closed on 6 May 2018. as of November 2019, no conclusions or responses have yet emerged. In Europe, there are three broad parameters that define SMEs:
Micro enterprises have up to 10 employees
Small enterprises have up to 50 employees
Medium sized enterprises have up to 250 employees. The European definition of SME follows: "The category of micro, small and medium sized enterprises (SMEs) is made up of enterprises which employ fewer than 250 persons and which have an annual turnover not exceeding 50 million euro, and/or an annual balance sheet total not exceeding 43 million euro." In order to prepare for an evaluation and revision of some features of the small and medium sized enterprises definition European Union established public consultation period from 6 February 2018 to 6 May 2018. Public consultation is available for all EU member country citizens and organizations. Especially, national and regional authorities, enterprises, business associations or organizations, venture capital providers, research and academic institutions, and individual citizens are expected as the main contributors. EU member states have had individual definitions of what constitutes an SME. For example, the definition in Germany had a limit of 255 employees, while in Belgium it could have been 100. The result is that while a Belgian business of 249 employees would be taxed at full rate in Belgium, it would nevertheless be eligible for SME subsidy under a European labelled programme. SMEs are a crucial element in the supplier network of large enterprises which are already on their way towards Industry 4.0. According to German economist Hans Heinrich Bass, "empirical research on SME as well as policies to promote SME have a long tradition in [West] Germany, dating back into the 19th century. Until the mid 20th century, most researchers considered SME as an impediment to further economic development and SME policies were thus designed in the framework of social policies. Only the Ordoliberalism school, the founding fathers of Germany's social market economy, discovered their strengths, considered SME as a solution to mid 20th century economic problems (mass unemployment, abuse of economic power), and laid the foundations for non selective (functional) industrial policies to promote SMEs." Only around 20% of European SMEs are substantially digitalized, compared to almost 50% of major businesses. Small and medium sized companies make up 56.2% of the non financial sector. Smaller companies account for more than 60% of the value contributed to the non financial sector in Belgium, Italy, and Spain, three of the nations worst hit by the COVID 19 pandemic. An estimated 50% of Europe's small firms may fail because they lack the substantial financial reserves required to weather the crisis. With around 338,000 functioning in Bulgaria in 2022, SMEs and mid caps are major contributors in the Bulgarian economy. They also employ over 75% of the workforce and create 65% of the economy's added value. The results of an EU survey conducted in 2021 suggest that during the pandemic, in countries with larger fiscal packages, SMEs were on average more likely to experience bankruptcy even after controlling for the size of the shock, the use of bank financing, and country and sector fixed effects. When policy assistance rises by 1% of GDP, the probabilities of bankruptcy for a SME are 2.7 times higher than for a non SME. Credit limitations are especially difficult for SMEs and new businesses to overcome. Credit constraints affect 24% of SMEs and 27% of young businesses. Poland
The SME sector in Poland generates almost 50% of the GDP, and out of that, for instance, in 2011, micro companies generated 29.6%, small companies 7.7%, and medium companies 10.4% (big companies 24.0%; other entities 16.5%, and revenues from customs duties and taxes generated 11.9%). In 2011, out of the total of 1,784,603 entities operating in Poland, merely 3,189 were classified as "large", so 1,781,414 were micro, small, or medium. SMEs employed 6.3 million people out of the total of 9.0 million of labour employed in the private sector. In Poland in 2011 there were 36.2 SMEs per 1,000 inhabitants. Nearly seven million people are employed by small businesses in Poland, which accounts for around half of the country's GDP, yet smaller businesses are less likely than larger ones to invest in strategies to combat climate change or boost energy efficiency. In October 2021, the Bank Ochrony rodowiska, a Polish bank that specializes in funding environmental protection initiatives received €75 million from the European Investment Bank (EIB) for these small enterprises. The Polish bank wants to use at least 50% of the loan for initiatives with a clear emphasis on tackling climate change, such improving building energy efficiency or turning to renewable energy sources like solar power. The money is set to be distributed across Poland, with around 80% of it projected to go to cohesive regions. Very small companies are called in the UK micro entities, which have simpler financial reporting requirements. Such micro enterprises must meet any two of the following criteria: balance sheet £316,000 or less; turnover £632,000 or less; employees 10 or less. Many small and medium sized businesses form part of the UK's currently growing Mittelstand, or Brittelstand'' as it is also sometimes named. These are businesses in Britain that are not only small or medium but also have a much broader set of values and more elastic definition. The Department for Business Innovation and Skills estimated that at the start of 2014, 99.3% of UK private sector businesses were SMEs, with their £1.6 trillion annual turnover accounting for 47% of private sector turnover. In order to support SMEs, the UK government set a target in 2010 "that 25% of government’s spend, either directly or in supply chains, goes to SMEs by 2015"; it achieved this by 2013.
Small and medium sized enterprises (SMEs) or small and medium sized businesses (SMBs) are businesses whose personnel and revenue numbers fall below certain limits. The abbreviation "SME" is used by international organizations such as the World Bank, the OECD, European Union, the United Nations, and the World Trade Organization (WTO). In any given national economy, SMEs sometimes outnumber large companies by a wide margin and also employ many more people. For example, Australian SMEs makeup 98% of all Australian businesses, produce one third of the total GDP (gross domestic product) and employ 4.7 million people. In Chile, in the commercial year 2014, 98.5% of the firms were classified as SMEs. In Tunisia, the self employed workers alone account for about 28% of the total non farm employment, and firms with fewer than 100 employees account for about 62% of total employment. The United States' SMEs generate half of all U. S. jobs, but only 40% of GDP. Developing countries tend to have a larger share of small and medium sized enterprises. Although they create more new jobs than large firms, SMEs also suffer the majority of job destruction/contraction. According to the World Bank Group's 2021 FINDEX database, there is a $1.7 trillion funding gap for formal, women owned micro, small, and medium sized enterprises. Additionally, over 68% of small women owned firms lack access to finance.' Overview
SMEs are important for economic and social reasons, given the sector's role in employment. Due to their sizes, SMEs are heavily influenced by their Chief Executive Officer, a. k. a. CEOs. The CEOs of SMEs are often the founders, owners, and managers of the SMEs. The duties of the CEO in a SME mirror those of the CEO of a large company: the CEO needs to strategically allocate their time, energy, and assets to direct the SMEs. Typically, the CEO is the strategist, champion and leader for developing the SME or the prime reason for the business failing. At the employee level, Petrakis and Kostis (2012) explore the role of interpersonal trust and knowledge in the number of small and medium enterprises. They conclude that knowledge positively affects the number of SMEs, which in turn positively affects interpersonal trust. Note that the empirical results indicate that interpersonal trust does not affect the number of SMEs. Therefore, although knowledge development can reinforce SMEs, trust becomes widespread in a society when the number of SMEs is greater. Legal boundary on SMEs around the world
Multilateral organizations have been criticized for using one measure for all. The legal boundary of SMEs around the world vary, and below is a list of the upper limits of SMEs in some countries. Africa
African small businesses frequently struggle to get the cash they require to thrive. According to the SME Finance Forum, the formal financing gap for African SMEs averaged 17% of GDP across the 43 countries assessed in 2017. According to the World Bank, women own 58% of all MSMEs in Africa. The European Investment Bank's Banking in Africa survey, 2021 suggests that most of the responding banks had a non performing loan (NPL) ratio of at least 5%. NPLs account for at least 10% of the SME portfolio in approximately one third of African banks. Furthermore, 50% of the banks had at least 5% of their SME portfolio under the moratorium, and 40% had at least 5% of SME loans under some type of restructuring. Somalia
In Somalia, the term is SME (for "small, medium, and micro enterprises"); elsewhere in Africa, MSME stands for "micro, small, and medium enterprises". An SME is defined as a small business that has more than 30 employees but less than 250 employees. South Africa
In the National Small Business Amendment Act 2004, micro businesses in the different sectors, varying from the manufacturing to the retail sectors, are defined as businesses with five or fewer employees and a turnover of up to R100,000 ZAR ($6,900). Very small businesses employ between 6 and 20 employees, while small businesses employ between 21 and 50 employees. The upper limit for turnover in a small business varies from R1 million ($69,200) in the agricultural sector to R13 million ($899,800) in the catering, accommodations and other trade sectors as well as in the manufacturing sector, with a maximum of R32 million ($2,214,800) in the wholesale trade sector. Medium sized businesses''' usually employ up to 200 people (100 in the agricultural sector), and the maximum turnover varies from R5 million ($346,100) in the agricultural sector to R51 ($3,529,800) million in the manufacturing sector and R64 ($4,429,600) million in the wholesale trade, commercial agents and allied services sector. A comprehensive definition of an SME in South Africa is, therefore, an enterprise with one or more of the following characteristics:
Fewer than 200 employees,
Annual turnover of less than R64 million,
Capital assets of less than R10 million,
Direct managerial involvement by owners
Asia
SMEs account for nearly 90% of all company entities in developing Asian countries and are the principal private sector employers, supplying 50 80% of all jobs. SMEs cover 97 99% of all firms in South east Asia, contributing considerably to each country's GDP—for example, 46% in Singapore, 57% in Indonesia, and over 40% in other nations. 98% of business establishments in Hong Kong are defined as SMEs and employed 45% of the work force. India
India defines Micro, Small and Medium Enterprises based on dual criteria of investment and turnover. This definition is provided in Section 7 of Micro, Small & Medium Enterprises Development Act, 2006 (MSMED Act) and was notified in September 2006. The Act provides for the classification of enterprises based on their investment size and the nature of the activity undertaken by that enterprise. As per MSMED Act, enterprises are classified into two categories manufacturing enterprises and service enterprises. For each of these categories, a definition is given to explain what constitutes a micro enterprise or a small enterprise or a medium enterprise. If an enterprise does not fall under the above categories, it would be considered a large scale enterprise. In June 2020, India updated the definition as follows:
+Sr NoClassificationCriteria (in ₹)1Micro EnterprisesInvestment <= 1 cr and Turnover <= 5 cr2Small EnterprisesInvestment <= 10 cr and Turnover <= 50 cr3Medium EnterprisesInvestment <= 50 cr and Turnover <= 250 cr
Businesses that are declared as MSMEs and within specific sectors and criteria can then apply for "priority sector" lending to help with business expenses; banks have annual targets set by the Prime Minister's Task Force on MSMEs for year on year increases of lending to various categories of MSMEs. MSME is considered a key contributor to India's growth and contributes 48% to India's total export. Indonesia
In Indonesia, the government defines micro, small, and medium enterprises (Indonesian: usaha mikro kecil menengah, UMKM) based on their assets and revenues according to Law No. 20/2008:
Type Maximum assets, Rp Gross Revenue, Rp Number of Employee Statistics Indonesia Micro maximum 50,000,000 maximum 300,000,000 1 4 Small 50,000,000 500,000,000 300,000,000 2,500,000,000 5 9 Medium 500,000,000 10,000,000,000 2,500,000,000 50,000,000,000 20 99 Large >10,000,000,000 >50,000,000,000 >99
An annual revenue of Rp 50 billion is approximately equal to US$3.1 million as of April 2024. Despite their significant contribution to GDP and job creation, Indonesian MSMEs confront a number of obstacles. One of the most significant is capital access: 60 70 percent of MSMEs lack access to financial institutions and their funding options. Other restrictions include inadequate infrastructure, difficulties acquiring company licences and permissions, high tax rates, political insecurity, and improving their brand image in the digital era. 21st century businesses strategically use both their websites and social media in order to advertise their products and control their branding. Quality content on both information streams will positively affect branding and attract customers. The People's Business Credit (Kredit Usaha Rakyat, or KUR [id]) was established in 2007 by President Yudhoyono to extend credit to businesses that were considered "feasible but not bankable". Bank Rakyat Indonesia conducts more than half of KUR lending nationwide. In Jakarta, the capital city of Indonesia, 529 MSMEs with the potential to be funded have been identified by Bank Indonesia. Economy Sector Number of Companies Processing Industry 151 Health Services and Social Activities 1 Rental leasing services without option rights, employment, travel agents and other business support 9 Professional, Scientific And Technical Services 11 Other Service Activities 21 Arts, Entertainment And Recreation 1 Construction 2 Water Procurement, Waste Management And Recycling, Waste And Garbage Disposal And Cleaning 1 Provision of Accommodation and Provision of Food and Drink 80 Wholesale and retail trade of car and motorcycle repair and maintenance 236 Agriculture, Forestry, and Fisheries 16
Philippines
According to the Department of Trade and Industry's 2020 List of Establishments report, there are 957,620 registered business enterprises operating in the country, composed of 99.51% MSMEs and 0.49% large firms. The MSMEs consist of 88.77% microenterprises, 10.25% small enterprises, and 0.49% medium enterprises. Among the top industry sectors include (1) wholesale and retail trade; repair of motor vehicles and motorcycles (445,386); (2) accommodation and food service activities (134,046); (3) manufacturing (110,916); (4) other service activities (62,376); and (5) financial and insurance activities (45,558) which accounted for about 83.77% of the total number of MSME establishments. Prior to the pandemic, MSMEs generated more than 5.38 million jobs or 62.66% of the country's total employment with a 29.38% share from micro enterprises followed by 25.78% and 7.50% for small and medium enterprises. Europe
European Union
Small companies are important to the European economy as they account for 99.8% of non financial enterprises in the European Union (EU) and employ two thirds of the workforce in the EU. The majority of European firms are small and medium sized enterprises (SMEs), employing over 100 million people. Due to the COVID 19 pandemic, a large majority of SMEs saw a decline in revenue during 2020 2021. Medium sized businesses (or mid caps) play an important role in the European economy, accounting for a considerable part of employment and wealth production. According to a recent European Commission analysis, mid cap companies (250 3000 people) make up about 17% of total employment and 21% of turnover in the EU27 business sector. Micro firms (with fewer than nine employees) employ 38% of the total workforce, while SMEs with fewer than 250 employees account for 34.4%. Larger (XL) firms with 3,000 or more employees account for 10.1% of overall employment in EU business sectors. According to Eurostat SBS statistics, in 2021, tiny enterprises (0 9 workers) and SMEs (excluding micro firms) employed around 30% and 34.5% of the entire workforce in EU27 business sectors, while bigger firms (250+ employees) contributed for 36.4% of overall employment. The pandemic has had a greater impact on SMEs than on large businesses, with an average sales loss of 26% versus 23% for large businesses. Government assistance appears to have benefited SMEs more than large corporations among the companies that do have overdraft facilities, indicating a successful application of policies to ease financial limitations for SMEs even when they receive help from the banking sector. The EIB Group contributed more than €16.35 billion to small and medium sized firms in 2022. SMEs were more quick in altering output during the pandemic, despite the intensity of the shock. In reaction to the crisis, one third of major enterprises altered their output or services, compared to 37% of SMEs. The criteria for defining the size of a business differ from country to country, with many countries having programs of business rate reduction and financial subsidy for SMEs. According to the European Commission, SMEs are enterprises which meet the following definition of staff headcount and either the turnover or balance sheet total definitions:
Company category Staff headcount Turnover Balance sheet total Medium sized < 250 ≤ €50 million ≤ €43 million Small < 50 ≤ €10 million ≤ €10 million Micro < 10 ≤ €2 million ≤ €2 million
In July 2011, the European Commission said it would open a consultation on the definition of SMEs in 2012. A consultation document was issued on 6 February 2018 and the consultation period closed on 6 May 2018. as of November 2019, no conclusions or responses have yet emerged. In Europe, there are three broad parameters that define SMEs:
Micro enterprises have up to 10 employees
Small enterprises have up to 50 employees
Medium sized enterprises have up to 250 employees. The European definition of SME follows: "The category of micro, small and medium sized enterprises (SMEs) is made up of enterprises which employ fewer than 250 persons and which have an annual turnover not exceeding 50 million euro, and/or an annual balance sheet total not exceeding 43 million euro." In order to prepare for an evaluation and revision of some features of the small and medium sized enterprises definition European Union established public consultation period from 6 February 2018 to 6 May 2018. Public consultation is available for all EU member country citizens and organizations. Especially, national and regional authorities, enterprises, business associations or organizations, venture capital providers, research and academic institutions, and individual citizens are expected as the main contributors. EU member states have had individual definitions of what constitutes an SME. For example, the definition in Germany had a limit of 255 employees, while in Belgium it could have been 100. The result is that while a Belgian business of 249 employees would be taxed at full rate in Belgium, it would nevertheless be eligible for SME subsidy under a European labelled programme. SMEs are a crucial element in the supplier network of large enterprises which are already on their way towards Industry 4.0. According to German economist Hans Heinrich Bass, "empirical research on SME as well as policies to promote SME have a long tradition in [West] Germany, dating back into the 19th century. Until the mid 20th century, most researchers considered SME as an impediment to further economic development and SME policies were thus designed in the framework of social policies. Only the Ordoliberalism school, the founding fathers of Germany's social market economy, discovered their strengths, considered SME as a solution to mid 20th century economic problems (mass unemployment, abuse of economic power), and laid the foundations for non selective (functional) industrial policies to promote SMEs." Only around 20% of European SMEs are substantially digitalized, compared to almost 50% of major businesses. Small and medium sized companies make up 56.2% of the non financial sector. Smaller companies account for more than 60% of the value contributed to the non financial sector in Belgium, Italy, and Spain, three of the nations worst hit by the COVID 19 pandemic. An estimated 50% of Europe's small firms may fail because they lack the substantial financial reserves required to weather the crisis. With around 338,000 functioning in Bulgaria in 2022, SMEs and mid caps are major contributors in the Bulgarian economy. They also employ over 75% of the workforce and create 65% of the economy's added value. The results of an EU survey conducted in 2021 suggest that during the pandemic, in countries with larger fiscal packages, SMEs were on average more likely to experience bankruptcy even after controlling for the size of the shock, the use of bank financing, and country and sector fixed effects. When policy assistance rises by 1% of GDP, the probabilities of bankruptcy for a SME are 2.7 times higher than for a non SME. Credit limitations are especially difficult for SMEs and new businesses to overcome. Credit constraints affect 24% of SMEs and 27% of young businesses. Poland
The SME sector in Poland generates almost 50% of the GDP, and out of that, for instance, in 2011, micro companies generated 29.6%, small companies 7.7%, and medium companies 10.4% (big companies 24.0%; other entities 16.5%, and revenues from customs duties and taxes generated 11.9%). In 2011, out of the total of 1,784,603 entities operating in Poland, merely 3,189 were classified as "large", so 1,781,414 were micro, small, or medium. SMEs employed 6.3 million people out of the total of 9.0 million of labour employed in the private sector. In Poland in 2011 there were 36.2 SMEs per 1,000 inhabitants. Nearly seven million people are employed by small businesses in Poland, which accounts for around half of the country's GDP, yet smaller businesses are less likely than larger ones to invest in strategies to combat climate change or boost energy efficiency. In October 2021, the Bank Ochrony rodowiska, a Polish bank that specializes in funding environmental protection initiatives received €75 million from the European Investment Bank (EIB) for these small enterprises. The Polish bank wants to use at least 50% of the loan for initiatives with a clear emphasis on tackling climate change, such improving building energy efficiency or turning to renewable energy sources like solar power. The money is set to be distributed across Poland, with around 80% of it projected to go to cohesive regions. Very small companies are called in the UK micro entities, which have simpler financial reporting requirements. Such micro enterprises must meet any two of the following criteria: balance sheet £316,000 or less; turnover £632,000 or less; employees 10 or less. Many small and medium sized businesses form part of the UK's currently growing Mittelstand, or Brittelstand'' as it is also sometimes named. These are businesses in Britain that are not only small or medium but also have a much broader set of values and more elastic definition. The Department for Business Innovation and Skills estimated that at the start of 2014, 99.3% of UK private sector businesses were SMEs, with their £1.6 trillion annual turnover accounting for 47% of private sector turnover. In order to support SMEs, the UK government set a target in 2010 "that 25% of government’s spend, either directly or in supply chains, goes to SMEs by 2015"; it achieved this by 2013.
Азия. МСП составляют почти 90% всех компаний в развивающихся странах Азии и являются основными работодателями частного сектора, обеспечивая 50-80% всех рабочих мест. МСП составляют 97-99% всех предприятий в Юго-Восточной Азии, внося значительный вклад в ВВП каждой страны – например, 46% в Сингапуре, 57% в Индонезии и более 40% в других странах. 98% предприятий в Гонконге определяются как МСП и обеспечивают занятость 45% рабочей силы.
Type of business with small personnel numbers
Small and medium sized enterprises (SMEs) or small and medium sized businesses (SMBs) are businesses whose personnel and revenue numbers fall below certain limits. The abbreviation "SME" is used by international organizations such as the World Bank, the OECD, European Union, the United Nations, and the World Trade Organization (WTO). In any given national economy, SMEs sometimes outnumber large companies by a wide margin and also employ many more people. For example, Australian SMEs makeup 98% of all Australian businesses, produce one third of the total GDP (gross domestic product) and employ 4.7 million people. In Chile, in the commercial year 2014, 98.5% of the firms were classified as SMEs. In Tunisia, the self employed workers alone account for about 28% of the total non farm employment, and firms with fewer than 100 employees account for about 62% of total employment. The United States' SMEs generate half of all U. S. jobs, but only 40% of GDP. Developing countries tend to have a larger share of small and medium sized enterprises. Although they create more new jobs than large firms, SMEs also suffer the majority of job destruction/contraction. According to the World Bank Group's 2021 FINDEX database, there is a $1.7 trillion funding gap for formal, women owned micro, small, and medium sized enterprises. Additionally, over 68% of small women owned firms lack access to finance.' Overview
SMEs are important for economic and social reasons, given the sector's role in employment. Due to their sizes, SMEs are heavily influenced by their Chief Executive Officer, a. k. a. CEOs. The CEOs of SMEs are often the founders, owners, and managers of the SMEs. The duties of the CEO in a SME mirror those of the CEO of a large company: the CEO needs to strategically allocate their time, energy, and assets to direct the SMEs. Typically, the CEO is the strategist, champion and leader for developing the SME or the prime reason for the business failing. At the employee level, Petrakis and Kostis (2012) explore the role of interpersonal trust and knowledge in the number of small and medium enterprises. They conclude that knowledge positively affects the number of SMEs, which in turn positively affects interpersonal trust. Note that the empirical results indicate that interpersonal trust does not affect the number of SMEs. Therefore, although knowledge development can reinforce SMEs, trust becomes widespread in a society when the number of SMEs is greater. Legal boundary on SMEs around the world
Multilateral organizations have been criticized for using one measure for all. The legal boundary of SMEs around the world vary, and below is a list of the upper limits of SMEs in some countries. Africa
African small businesses frequently struggle to get the cash they require to thrive. According to the SME Finance Forum, the formal financing gap for African SMEs averaged 17% of GDP across the 43 countries assessed in 2017. According to the World Bank, women own 58% of all MSMEs in Africa. The European Investment Bank's Banking in Africa survey, 2021 suggests that most of the responding banks had a non performing loan (NPL) ratio of at least 5%. NPLs account for at least 10% of the SME portfolio in approximately one third of African banks. Furthermore, 50% of the banks had at least 5% of their SME portfolio under the moratorium, and 40% had at least 5% of SME loans under some type of restructuring. Somalia
In Somalia, the term is SME (for "small, medium, and micro enterprises"); elsewhere in Africa, MSME stands for "micro, small, and medium enterprises". An SME is defined as a small business that has more than 30 employees but less than 250 employees. South Africa
In the National Small Business Amendment Act 2004, micro businesses in the different sectors, varying from the manufacturing to the retail sectors, are defined as businesses with five or fewer employees and a turnover of up to R100,000 ZAR ($6,900). Very small businesses employ between 6 and 20 employees, while small businesses employ between 21 and 50 employees. The upper limit for turnover in a small business varies from R1 million ($69,200) in the agricultural sector to R13 million ($899,800) in the catering, accommodations and other trade sectors as well as in the manufacturing sector, with a maximum of R32 million ($2,214,800) in the wholesale trade sector. Medium sized businesses''' usually employ up to 200 people (100 in the agricultural sector), and the maximum turnover varies from R5 million ($346,100) in the agricultural sector to R51 ($3,529,800) million in the manufacturing sector and R64 ($4,429,600) million in the wholesale trade, commercial agents and allied services sector. A comprehensive definition of an SME in South Africa is, therefore, an enterprise with one or more of the following characteristics:
Fewer than 200 employees,
Annual turnover of less than R64 million,
Capital assets of less than R10 million,
Direct managerial involvement by owners
Asia
SMEs account for nearly 90% of all company entities in developing Asian countries and are the principal private sector employers, supplying 50 80% of all jobs. SMEs cover 97 99% of all firms in South east Asia, contributing considerably to each country's GDP—for example, 46% in Singapore, 57% in Indonesia, and over 40% in other nations. 98% of business establishments in Hong Kong are defined as SMEs and employed 45% of the work force. India
India defines Micro, Small and Medium Enterprises based on dual criteria of investment and turnover. This definition is provided in Section 7 of Micro, Small & Medium Enterprises Development Act, 2006 (MSMED Act) and was notified in September 2006. The Act provides for the classification of enterprises based on their investment size and the nature of the activity undertaken by that enterprise. As per MSMED Act, enterprises are classified into two categories manufacturing enterprises and service enterprises. For each of these categories, a definition is given to explain what constitutes a micro enterprise or a small enterprise or a medium enterprise. If an enterprise does not fall under the above categories, it would be considered a large scale enterprise. In June 2020, India updated the definition as follows:
+Sr NoClassificationCriteria (in ₹)1Micro EnterprisesInvestment <= 1 cr and Turnover <= 5 cr2Small EnterprisesInvestment <= 10 cr and Turnover <= 50 cr3Medium EnterprisesInvestment <= 50 cr and Turnover <= 250 cr
Businesses that are declared as MSMEs and within specific sectors and criteria can then apply for "priority sector" lending to help with business expenses; banks have annual targets set by the Prime Minister's Task Force on MSMEs for year on year increases of lending to various categories of MSMEs. MSME is considered a key contributor to India's growth and contributes 48% to India's total export. Indonesia
In Indonesia, the government defines micro, small, and medium enterprises (Indonesian: usaha mikro kecil menengah, UMKM) based on their assets and revenues according to Law No. 20/2008:
Type Maximum assets, Rp Gross Revenue, Rp Number of Employee Statistics Indonesia Micro maximum 50,000,000 maximum 300,000,000 1 4 Small 50,000,000 500,000,000 300,000,000 2,500,000,000 5 9 Medium 500,000,000 10,000,000,000 2,500,000,000 50,000,000,000 20 99 Large >10,000,000,000 >50,000,000,000 >99
An annual revenue of Rp 50 billion is approximately equal to US$3.1 million as of April 2024. Despite their significant contribution to GDP and job creation, Indonesian MSMEs confront a number of obstacles. One of the most significant is capital access: 60 70 percent of MSMEs lack access to financial institutions and their funding options. Other restrictions include inadequate infrastructure, difficulties acquiring company licences and permissions, high tax rates, political insecurity, and improving their brand image in the digital era. 21st century businesses strategically use both their websites and social media in order to advertise their products and control their branding. Quality content on both information streams will positively affect branding and attract customers. The People's Business Credit (Kredit Usaha Rakyat, or KUR [id]) was established in 2007 by President Yudhoyono to extend credit to businesses that were considered "feasible but not bankable". Bank Rakyat Indonesia conducts more than half of KUR lending nationwide. In Jakarta, the capital city of Indonesia, 529 MSMEs with the potential to be funded have been identified by Bank Indonesia. Economy Sector Number of Companies Processing Industry 151 Health Services and Social Activities 1 Rental leasing services without option rights, employment, travel agents and other business support 9 Professional, Scientific And Technical Services 11 Other Service Activities 21 Arts, Entertainment And Recreation 1 Construction 2 Water Procurement, Waste Management And Recycling, Waste And Garbage Disposal And Cleaning 1 Provision of Accommodation and Provision of Food and Drink 80 Wholesale and retail trade of car and motorcycle repair and maintenance 236 Agriculture, Forestry, and Fisheries 16
Philippines
According to the Department of Trade and Industry's 2020 List of Establishments report, there are 957,620 registered business enterprises operating in the country, composed of 99.51% MSMEs and 0.49% large firms. The MSMEs consist of 88.77% microenterprises, 10.25% small enterprises, and 0.49% medium enterprises. Among the top industry sectors include (1) wholesale and retail trade; repair of motor vehicles and motorcycles (445,386); (2) accommodation and food service activities (134,046); (3) manufacturing (110,916); (4) other service activities (62,376); and (5) financial and insurance activities (45,558) which accounted for about 83.77% of the total number of MSME establishments. Prior to the pandemic, MSMEs generated more than 5.38 million jobs or 62.66% of the country's total employment with a 29.38% share from micro enterprises followed by 25.78% and 7.50% for small and medium enterprises. Europe
European Union
Small companies are important to the European economy as they account for 99.8% of non financial enterprises in the European Union (EU) and employ two thirds of the workforce in the EU. The majority of European firms are small and medium sized enterprises (SMEs), employing over 100 million people. Due to the COVID 19 pandemic, a large majority of SMEs saw a decline in revenue during 2020 2021. Medium sized businesses (or mid caps) play an important role in the European economy, accounting for a considerable part of employment and wealth production. According to a recent European Commission analysis, mid cap companies (250 3000 people) make up about 17% of total employment and 21% of turnover in the EU27 business sector. Micro firms (with fewer than nine employees) employ 38% of the total workforce, while SMEs with fewer than 250 employees account for 34.4%. Larger (XL) firms with 3,000 or more employees account for 10.1% of overall employment in EU business sectors. According to Eurostat SBS statistics, in 2021, tiny enterprises (0 9 workers) and SMEs (excluding micro firms) employed around 30% and 34.5% of the entire workforce in EU27 business sectors, while bigger firms (250+ employees) contributed for 36.4% of overall employment. The pandemic has had a greater impact on SMEs than on large businesses, with an average sales loss of 26% versus 23% for large businesses. Government assistance appears to have benefited SMEs more than large corporations among the companies that do have overdraft facilities, indicating a successful application of policies to ease financial limitations for SMEs even when they receive help from the banking sector. The EIB Group contributed more than €16.35 billion to small and medium sized firms in 2022. SMEs were more quick in altering output during the pandemic, despite the intensity of the shock. In reaction to the crisis, one third of major enterprises altered their output or services, compared to 37% of SMEs. The criteria for defining the size of a business differ from country to country, with many countries having programs of business rate reduction and financial subsidy for SMEs. According to the European Commission, SMEs are enterprises which meet the following definition of staff headcount and either the turnover or balance sheet total definitions:
Company category Staff headcount Turnover Balance sheet total Medium sized < 250 ≤ €50 million ≤ €43 million Small < 50 ≤ €10 million ≤ €10 million Micro < 10 ≤ €2 million ≤ €2 million
In July 2011, the European Commission said it would open a consultation on the definition of SMEs in 2012. A consultation document was issued on 6 February 2018 and the consultation period closed on 6 May 2018. as of November 2019, no conclusions or responses have yet emerged. In Europe, there are three broad parameters that define SMEs:
Micro enterprises have up to 10 employees
Small enterprises have up to 50 employees
Medium sized enterprises have up to 250 employees. The European definition of SME follows: "The category of micro, small and medium sized enterprises (SMEs) is made up of enterprises which employ fewer than 250 persons and which have an annual turnover not exceeding 50 million euro, and/or an annual balance sheet total not exceeding 43 million euro." In order to prepare for an evaluation and revision of some features of the small and medium sized enterprises definition European Union established public consultation period from 6 February 2018 to 6 May 2018. Public consultation is available for all EU member country citizens and organizations. Especially, national and regional authorities, enterprises, business associations or organizations, venture capital providers, research and academic institutions, and individual citizens are expected as the main contributors. EU member states have had individual definitions of what constitutes an SME. For example, the definition in Germany had a limit of 255 employees, while in Belgium it could have been 100. The result is that while a Belgian business of 249 employees would be taxed at full rate in Belgium, it would nevertheless be eligible for SME subsidy under a European labelled programme. SMEs are a crucial element in the supplier network of large enterprises which are already on their way towards Industry 4.0. According to German economist Hans Heinrich Bass, "empirical research on SME as well as policies to promote SME have a long tradition in [West] Germany, dating back into the 19th century. Until the mid 20th century, most researchers considered SME as an impediment to further economic development and SME policies were thus designed in the framework of social policies. Only the Ordoliberalism school, the founding fathers of Germany's social market economy, discovered their strengths, considered SME as a solution to mid 20th century economic problems (mass unemployment, abuse of economic power), and laid the foundations for non selective (functional) industrial policies to promote SMEs." Only around 20% of European SMEs are substantially digitalized, compared to almost 50% of major businesses. Small and medium sized companies make up 56.2% of the non financial sector. Smaller companies account for more than 60% of the value contributed to the non financial sector in Belgium, Italy, and Spain, three of the nations worst hit by the COVID 19 pandemic. An estimated 50% of Europe's small firms may fail because they lack the substantial financial reserves required to weather the crisis. With around 338,000 functioning in Bulgaria in 2022, SMEs and mid caps are major contributors in the Bulgarian economy. They also employ over 75% of the workforce and create 65% of the economy's added value. The results of an EU survey conducted in 2021 suggest that during the pandemic, in countries with larger fiscal packages, SMEs were on average more likely to experience bankruptcy even after controlling for the size of the shock, the use of bank financing, and country and sector fixed effects. When policy assistance rises by 1% of GDP, the probabilities of bankruptcy for a SME are 2.7 times higher than for a non SME. Credit limitations are especially difficult for SMEs and new businesses to overcome. Credit constraints affect 24% of SMEs and 27% of young businesses. Poland
The SME sector in Poland generates almost 50% of the GDP, and out of that, for instance, in 2011, micro companies generated 29.6%, small companies 7.7%, and medium companies 10.4% (big companies 24.0%; other entities 16.5%, and revenues from customs duties and taxes generated 11.9%). In 2011, out of the total of 1,784,603 entities operating in Poland, merely 3,189 were classified as "large", so 1,781,414 were micro, small, or medium. SMEs employed 6.3 million people out of the total of 9.0 million of labour employed in the private sector. In Poland in 2011 there were 36.2 SMEs per 1,000 inhabitants. Nearly seven million people are employed by small businesses in Poland, which accounts for around half of the country's GDP, yet smaller businesses are less likely than larger ones to invest in strategies to combat climate change or boost energy efficiency. In October 2021, the Bank Ochrony rodowiska, a Polish bank that specializes in funding environmental protection initiatives received €75 million from the European Investment Bank (EIB) for these small enterprises. The Polish bank wants to use at least 50% of the loan for initiatives with a clear emphasis on tackling climate change, such improving building energy efficiency or turning to renewable energy sources like solar power. The money is set to be distributed across Poland, with around 80% of it projected to go to cohesive regions. Very small companies are called in the UK micro entities, which have simpler financial reporting requirements. Such micro enterprises must meet any two of the following criteria: balance sheet £316,000 or less; turnover £632,000 or less; employees 10 or less. Many small and medium sized businesses form part of the UK's currently growing Mittelstand, or Brittelstand'' as it is also sometimes named. These are businesses in Britain that are not only small or medium but also have a much broader set of values and more elastic definition. The Department for Business Innovation and Skills estimated that at the start of 2014, 99.3% of UK private sector businesses were SMEs, with their £1.6 trillion annual turnover accounting for 47% of private sector turnover. In order to support SMEs, the UK government set a target in 2010 "that 25% of government’s spend, either directly or in supply chains, goes to SMEs by 2015"; it achieved this by 2013.
Small and medium sized enterprises (SMEs) or small and medium sized businesses (SMBs) are businesses whose personnel and revenue numbers fall below certain limits. The abbreviation "SME" is used by international organizations such as the World Bank, the OECD, European Union, the United Nations, and the World Trade Organization (WTO). In any given national economy, SMEs sometimes outnumber large companies by a wide margin and also employ many more people. For example, Australian SMEs makeup 98% of all Australian businesses, produce one third of the total GDP (gross domestic product) and employ 4.7 million people. In Chile, in the commercial year 2014, 98.5% of the firms were classified as SMEs. In Tunisia, the self employed workers alone account for about 28% of the total non farm employment, and firms with fewer than 100 employees account for about 62% of total employment. The United States' SMEs generate half of all U. S. jobs, but only 40% of GDP. Developing countries tend to have a larger share of small and medium sized enterprises. Although they create more new jobs than large firms, SMEs also suffer the majority of job destruction/contraction. According to the World Bank Group's 2021 FINDEX database, there is a $1.7 trillion funding gap for formal, women owned micro, small, and medium sized enterprises. Additionally, over 68% of small women owned firms lack access to finance.' Overview
SMEs are important for economic and social reasons, given the sector's role in employment. Due to their sizes, SMEs are heavily influenced by their Chief Executive Officer, a. k. a. CEOs. The CEOs of SMEs are often the founders, owners, and managers of the SMEs. The duties of the CEO in a SME mirror those of the CEO of a large company: the CEO needs to strategically allocate their time, energy, and assets to direct the SMEs. Typically, the CEO is the strategist, champion and leader for developing the SME or the prime reason for the business failing. At the employee level, Petrakis and Kostis (2012) explore the role of interpersonal trust and knowledge in the number of small and medium enterprises. They conclude that knowledge positively affects the number of SMEs, which in turn positively affects interpersonal trust. Note that the empirical results indicate that interpersonal trust does not affect the number of SMEs. Therefore, although knowledge development can reinforce SMEs, trust becomes widespread in a society when the number of SMEs is greater. Legal boundary on SMEs around the world
Multilateral organizations have been criticized for using one measure for all. The legal boundary of SMEs around the world vary, and below is a list of the upper limits of SMEs in some countries. Africa
African small businesses frequently struggle to get the cash they require to thrive. According to the SME Finance Forum, the formal financing gap for African SMEs averaged 17% of GDP across the 43 countries assessed in 2017. According to the World Bank, women own 58% of all MSMEs in Africa. The European Investment Bank's Banking in Africa survey, 2021 suggests that most of the responding banks had a non performing loan (NPL) ratio of at least 5%. NPLs account for at least 10% of the SME portfolio in approximately one third of African banks. Furthermore, 50% of the banks had at least 5% of their SME portfolio under the moratorium, and 40% had at least 5% of SME loans under some type of restructuring. Somalia
In Somalia, the term is SME (for "small, medium, and micro enterprises"); elsewhere in Africa, MSME stands for "micro, small, and medium enterprises". An SME is defined as a small business that has more than 30 employees but less than 250 employees. South Africa
In the National Small Business Amendment Act 2004, micro businesses in the different sectors, varying from the manufacturing to the retail sectors, are defined as businesses with five or fewer employees and a turnover of up to R100,000 ZAR ($6,900). Very small businesses employ between 6 and 20 employees, while small businesses employ between 21 and 50 employees. The upper limit for turnover in a small business varies from R1 million ($69,200) in the agricultural sector to R13 million ($899,800) in the catering, accommodations and other trade sectors as well as in the manufacturing sector, with a maximum of R32 million ($2,214,800) in the wholesale trade sector. Medium sized businesses''' usually employ up to 200 people (100 in the agricultural sector), and the maximum turnover varies from R5 million ($346,100) in the agricultural sector to R51 ($3,529,800) million in the manufacturing sector and R64 ($4,429,600) million in the wholesale trade, commercial agents and allied services sector. A comprehensive definition of an SME in South Africa is, therefore, an enterprise with one or more of the following characteristics:
Fewer than 200 employees,
Annual turnover of less than R64 million,
Capital assets of less than R10 million,
Direct managerial involvement by owners
Asia
SMEs account for nearly 90% of all company entities in developing Asian countries and are the principal private sector employers, supplying 50 80% of all jobs. SMEs cover 97 99% of all firms in South east Asia, contributing considerably to each country's GDP—for example, 46% in Singapore, 57% in Indonesia, and over 40% in other nations. 98% of business establishments in Hong Kong are defined as SMEs and employed 45% of the work force. India
India defines Micro, Small and Medium Enterprises based on dual criteria of investment and turnover. This definition is provided in Section 7 of Micro, Small & Medium Enterprises Development Act, 2006 (MSMED Act) and was notified in September 2006. The Act provides for the classification of enterprises based on their investment size and the nature of the activity undertaken by that enterprise. As per MSMED Act, enterprises are classified into two categories manufacturing enterprises and service enterprises. For each of these categories, a definition is given to explain what constitutes a micro enterprise or a small enterprise or a medium enterprise. If an enterprise does not fall under the above categories, it would be considered a large scale enterprise. In June 2020, India updated the definition as follows:
+Sr NoClassificationCriteria (in ₹)1Micro EnterprisesInvestment <= 1 cr and Turnover <= 5 cr2Small EnterprisesInvestment <= 10 cr and Turnover <= 50 cr3Medium EnterprisesInvestment <= 50 cr and Turnover <= 250 cr
Businesses that are declared as MSMEs and within specific sectors and criteria can then apply for "priority sector" lending to help with business expenses; banks have annual targets set by the Prime Minister's Task Force on MSMEs for year on year increases of lending to various categories of MSMEs. MSME is considered a key contributor to India's growth and contributes 48% to India's total export. Indonesia
In Indonesia, the government defines micro, small, and medium enterprises (Indonesian: usaha mikro kecil menengah, UMKM) based on their assets and revenues according to Law No. 20/2008:
Type Maximum assets, Rp Gross Revenue, Rp Number of Employee Statistics Indonesia Micro maximum 50,000,000 maximum 300,000,000 1 4 Small 50,000,000 500,000,000 300,000,000 2,500,000,000 5 9 Medium 500,000,000 10,000,000,000 2,500,000,000 50,000,000,000 20 99 Large >10,000,000,000 >50,000,000,000 >99
An annual revenue of Rp 50 billion is approximately equal to US$3.1 million as of April 2024. Despite their significant contribution to GDP and job creation, Indonesian MSMEs confront a number of obstacles. One of the most significant is capital access: 60 70 percent of MSMEs lack access to financial institutions and their funding options. Other restrictions include inadequate infrastructure, difficulties acquiring company licences and permissions, high tax rates, political insecurity, and improving their brand image in the digital era. 21st century businesses strategically use both their websites and social media in order to advertise their products and control their branding. Quality content on both information streams will positively affect branding and attract customers. The People's Business Credit (Kredit Usaha Rakyat, or KUR [id]) was established in 2007 by President Yudhoyono to extend credit to businesses that were considered "feasible but not bankable". Bank Rakyat Indonesia conducts more than half of KUR lending nationwide. In Jakarta, the capital city of Indonesia, 529 MSMEs with the potential to be funded have been identified by Bank Indonesia. Economy Sector Number of Companies Processing Industry 151 Health Services and Social Activities 1 Rental leasing services without option rights, employment, travel agents and other business support 9 Professional, Scientific And Technical Services 11 Other Service Activities 21 Arts, Entertainment And Recreation 1 Construction 2 Water Procurement, Waste Management And Recycling, Waste And Garbage Disposal And Cleaning 1 Provision of Accommodation and Provision of Food and Drink 80 Wholesale and retail trade of car and motorcycle repair and maintenance 236 Agriculture, Forestry, and Fisheries 16
Philippines
According to the Department of Trade and Industry's 2020 List of Establishments report, there are 957,620 registered business enterprises operating in the country, composed of 99.51% MSMEs and 0.49% large firms. The MSMEs consist of 88.77% microenterprises, 10.25% small enterprises, and 0.49% medium enterprises. Among the top industry sectors include (1) wholesale and retail trade; repair of motor vehicles and motorcycles (445,386); (2) accommodation and food service activities (134,046); (3) manufacturing (110,916); (4) other service activities (62,376); and (5) financial and insurance activities (45,558) which accounted for about 83.77% of the total number of MSME establishments. Prior to the pandemic, MSMEs generated more than 5.38 million jobs or 62.66% of the country's total employment with a 29.38% share from micro enterprises followed by 25.78% and 7.50% for small and medium enterprises. Europe
European Union
Small companies are important to the European economy as they account for 99.8% of non financial enterprises in the European Union (EU) and employ two thirds of the workforce in the EU. The majority of European firms are small and medium sized enterprises (SMEs), employing over 100 million people. Due to the COVID 19 pandemic, a large majority of SMEs saw a decline in revenue during 2020 2021. Medium sized businesses (or mid caps) play an important role in the European economy, accounting for a considerable part of employment and wealth production. According to a recent European Commission analysis, mid cap companies (250 3000 people) make up about 17% of total employment and 21% of turnover in the EU27 business sector. Micro firms (with fewer than nine employees) employ 38% of the total workforce, while SMEs with fewer than 250 employees account for 34.4%. Larger (XL) firms with 3,000 or more employees account for 10.1% of overall employment in EU business sectors. According to Eurostat SBS statistics, in 2021, tiny enterprises (0 9 workers) and SMEs (excluding micro firms) employed around 30% and 34.5% of the entire workforce in EU27 business sectors, while bigger firms (250+ employees) contributed for 36.4% of overall employment. The pandemic has had a greater impact on SMEs than on large businesses, with an average sales loss of 26% versus 23% for large businesses. Government assistance appears to have benefited SMEs more than large corporations among the companies that do have overdraft facilities, indicating a successful application of policies to ease financial limitations for SMEs even when they receive help from the banking sector. The EIB Group contributed more than €16.35 billion to small and medium sized firms in 2022. SMEs were more quick in altering output during the pandemic, despite the intensity of the shock. In reaction to the crisis, one third of major enterprises altered their output or services, compared to 37% of SMEs. The criteria for defining the size of a business differ from country to country, with many countries having programs of business rate reduction and financial subsidy for SMEs. According to the European Commission, SMEs are enterprises which meet the following definition of staff headcount and either the turnover or balance sheet total definitions:
Company category Staff headcount Turnover Balance sheet total Medium sized < 250 ≤ €50 million ≤ €43 million Small < 50 ≤ €10 million ≤ €10 million Micro < 10 ≤ €2 million ≤ €2 million
In July 2011, the European Commission said it would open a consultation on the definition of SMEs in 2012. A consultation document was issued on 6 February 2018 and the consultation period closed on 6 May 2018. as of November 2019, no conclusions or responses have yet emerged. In Europe, there are three broad parameters that define SMEs:
Micro enterprises have up to 10 employees
Small enterprises have up to 50 employees
Medium sized enterprises have up to 250 employees. The European definition of SME follows: "The category of micro, small and medium sized enterprises (SMEs) is made up of enterprises which employ fewer than 250 persons and which have an annual turnover not exceeding 50 million euro, and/or an annual balance sheet total not exceeding 43 million euro." In order to prepare for an evaluation and revision of some features of the small and medium sized enterprises definition European Union established public consultation period from 6 February 2018 to 6 May 2018. Public consultation is available for all EU member country citizens and organizations. Especially, national and regional authorities, enterprises, business associations or organizations, venture capital providers, research and academic institutions, and individual citizens are expected as the main contributors. EU member states have had individual definitions of what constitutes an SME. For example, the definition in Germany had a limit of 255 employees, while in Belgium it could have been 100. The result is that while a Belgian business of 249 employees would be taxed at full rate in Belgium, it would nevertheless be eligible for SME subsidy under a European labelled programme. SMEs are a crucial element in the supplier network of large enterprises which are already on their way towards Industry 4.0. According to German economist Hans Heinrich Bass, "empirical research on SME as well as policies to promote SME have a long tradition in [West] Germany, dating back into the 19th century. Until the mid 20th century, most researchers considered SME as an impediment to further economic development and SME policies were thus designed in the framework of social policies. Only the Ordoliberalism school, the founding fathers of Germany's social market economy, discovered their strengths, considered SME as a solution to mid 20th century economic problems (mass unemployment, abuse of economic power), and laid the foundations for non selective (functional) industrial policies to promote SMEs." Only around 20% of European SMEs are substantially digitalized, compared to almost 50% of major businesses. Small and medium sized companies make up 56.2% of the non financial sector. Smaller companies account for more than 60% of the value contributed to the non financial sector in Belgium, Italy, and Spain, three of the nations worst hit by the COVID 19 pandemic. An estimated 50% of Europe's small firms may fail because they lack the substantial financial reserves required to weather the crisis. With around 338,000 functioning in Bulgaria in 2022, SMEs and mid caps are major contributors in the Bulgarian economy. They also employ over 75% of the workforce and create 65% of the economy's added value. The results of an EU survey conducted in 2021 suggest that during the pandemic, in countries with larger fiscal packages, SMEs were on average more likely to experience bankruptcy even after controlling for the size of the shock, the use of bank financing, and country and sector fixed effects. When policy assistance rises by 1% of GDP, the probabilities of bankruptcy for a SME are 2.7 times higher than for a non SME. Credit limitations are especially difficult for SMEs and new businesses to overcome. Credit constraints affect 24% of SMEs and 27% of young businesses. Poland
The SME sector in Poland generates almost 50% of the GDP, and out of that, for instance, in 2011, micro companies generated 29.6%, small companies 7.7%, and medium companies 10.4% (big companies 24.0%; other entities 16.5%, and revenues from customs duties and taxes generated 11.9%). In 2011, out of the total of 1,784,603 entities operating in Poland, merely 3,189 were classified as "large", so 1,781,414 were micro, small, or medium. SMEs employed 6.3 million people out of the total of 9.0 million of labour employed in the private sector. In Poland in 2011 there were 36.2 SMEs per 1,000 inhabitants. Nearly seven million people are employed by small businesses in Poland, which accounts for around half of the country's GDP, yet smaller businesses are less likely than larger ones to invest in strategies to combat climate change or boost energy efficiency. In October 2021, the Bank Ochrony rodowiska, a Polish bank that specializes in funding environmental protection initiatives received €75 million from the European Investment Bank (EIB) for these small enterprises. The Polish bank wants to use at least 50% of the loan for initiatives with a clear emphasis on tackling climate change, such improving building energy efficiency or turning to renewable energy sources like solar power. The money is set to be distributed across Poland, with around 80% of it projected to go to cohesive regions. Very small companies are called in the UK micro entities, which have simpler financial reporting requirements. Such micro enterprises must meet any two of the following criteria: balance sheet £316,000 or less; turnover £632,000 or less; employees 10 or less. Many small and medium sized businesses form part of the UK's currently growing Mittelstand, or Brittelstand'' as it is also sometimes named. These are businesses in Britain that are not only small or medium but also have a much broader set of values and more elastic definition. The Department for Business Innovation and Skills estimated that at the start of 2014, 99.3% of UK private sector businesses were SMEs, with their £1.6 trillion annual turnover accounting for 47% of private sector turnover. In order to support SMEs, the UK government set a target in 2010 "that 25% of government’s spend, either directly or in supply chains, goes to SMEs by 2015"; it achieved this by 2013.
Индия. Индия определяет микро-, малые и средние предприятия на основе двойных критериев инвестиций и оборота. Это определение приводится в разделе 7 Закона о развитии микро-, малых и средних предприятий 2006 года (MSMED Act) и было опубликовано в сентябре 2006 года. Закон предусматривает классификацию предприятий на основе размера инвестиций и характера деятельности, осуществляемой этим предприятием. В соответствии с MSMED Act предприятия классифицируются на две категории: производственные предприятия и предприятия сферы услуг. Для каждой из этих категорий дается определение, чтобы объяснить, что составляет микропредприятие, малое предприятие или среднее предприятие. Если предприятие не подпадает ни под одну из вышеуказанных категорий, оно считается крупным предприятием. В июне 2020 года Индия обновила определение следующим образом:
Type of business with small personnel numbers
Small and medium sized enterprises (SMEs) or small and medium sized businesses (SMBs) are businesses whose personnel and revenue numbers fall below certain limits. The abbreviation "SME" is used by international organizations such as the World Bank, the OECD, European Union, the United Nations, and the World Trade Organization (WTO). In any given national economy, SMEs sometimes outnumber large companies by a wide margin and also employ many more people. For example, Australian SMEs makeup 98% of all Australian businesses, produce one third of the total GDP (gross domestic product) and employ 4.7 million people. In Chile, in the commercial year 2014, 98.5% of the firms were classified as SMEs. In Tunisia, the self employed workers alone account for about 28% of the total non farm employment, and firms with fewer than 100 employees account for about 62% of total employment. The United States' SMEs generate half of all U. S. jobs, but only 40% of GDP. Developing countries tend to have a larger share of small and medium sized enterprises. Although they create more new jobs than large firms, SMEs also suffer the majority of job destruction/contraction. According to the World Bank Group's 2021 FINDEX database, there is a $1.7 trillion funding gap for formal, women owned micro, small, and medium sized enterprises. Additionally, over 68% of small women owned firms lack access to finance.' Overview
SMEs are important for economic and social reasons, given the sector's role in employment. Due to their sizes, SMEs are heavily influenced by their Chief Executive Officer, a. k. a. CEOs. The CEOs of SMEs are often the founders, owners, and managers of the SMEs. The duties of the CEO in a SME mirror those of the CEO of a large company: the CEO needs to strategically allocate their time, energy, and assets to direct the SMEs. Typically, the CEO is the strategist, champion and leader for developing the SME or the prime reason for the business failing. At the employee level, Petrakis and Kostis (2012) explore the role of interpersonal trust and knowledge in the number of small and medium enterprises. They conclude that knowledge positively affects the number of SMEs, which in turn positively affects interpersonal trust. Note that the empirical results indicate that interpersonal trust does not affect the number of SMEs. Therefore, although knowledge development can reinforce SMEs, trust becomes widespread in a society when the number of SMEs is greater. Legal boundary on SMEs around the world
Multilateral organizations have been criticized for using one measure for all. The legal boundary of SMEs around the world vary, and below is a list of the upper limits of SMEs in some countries. Africa
African small businesses frequently struggle to get the cash they require to thrive. According to the SME Finance Forum, the formal financing gap for African SMEs averaged 17% of GDP across the 43 countries assessed in 2017. According to the World Bank, women own 58% of all MSMEs in Africa. The European Investment Bank's Banking in Africa survey, 2021 suggests that most of the responding banks had a non performing loan (NPL) ratio of at least 5%. NPLs account for at least 10% of the SME portfolio in approximately one third of African banks. Furthermore, 50% of the banks had at least 5% of their SME portfolio under the moratorium, and 40% had at least 5% of SME loans under some type of restructuring. Somalia
In Somalia, the term is SME (for "small, medium, and micro enterprises"); elsewhere in Africa, MSME stands for "micro, small, and medium enterprises". An SME is defined as a small business that has more than 30 employees but less than 250 employees. South Africa
In the National Small Business Amendment Act 2004, micro businesses in the different sectors, varying from the manufacturing to the retail sectors, are defined as businesses with five or fewer employees and a turnover of up to R100,000 ZAR ($6,900). Very small businesses employ between 6 and 20 employees, while small businesses employ between 21 and 50 employees. The upper limit for turnover in a small business varies from R1 million ($69,200) in the agricultural sector to R13 million ($899,800) in the catering, accommodations and other trade sectors as well as in the manufacturing sector, with a maximum of R32 million ($2,214,800) in the wholesale trade sector. Medium sized businesses''' usually employ up to 200 people (100 in the agricultural sector), and the maximum turnover varies from R5 million ($346,100) in the agricultural sector to R51 ($3,529,800) million in the manufacturing sector and R64 ($4,429,600) million in the wholesale trade, commercial agents and allied services sector. A comprehensive definition of an SME in South Africa is, therefore, an enterprise with one or more of the following characteristics:
Fewer than 200 employees,
Annual turnover of less than R64 million,
Capital assets of less than R10 million,
Direct managerial involvement by owners
Asia
SMEs account for nearly 90% of all company entities in developing Asian countries and are the principal private sector employers, supplying 50 80% of all jobs. SMEs cover 97 99% of all firms in South east Asia, contributing considerably to each country's GDP—for example, 46% in Singapore, 57% in Indonesia, and over 40% in other nations. 98% of business establishments in Hong Kong are defined as SMEs and employed 45% of the work force. India
India defines Micro, Small and Medium Enterprises based on dual criteria of investment and turnover. This definition is provided in Section 7 of Micro, Small & Medium Enterprises Development Act, 2006 (MSMED Act) and was notified in September 2006. The Act provides for the classification of enterprises based on their investment size and the nature of the activity undertaken by that enterprise. As per MSMED Act, enterprises are classified into two categories manufacturing enterprises and service enterprises. For each of these categories, a definition is given to explain what constitutes a micro enterprise or a small enterprise or a medium enterprise. If an enterprise does not fall under the above categories, it would be considered a large scale enterprise. In June 2020, India updated the definition as follows:
+Sr NoClassificationCriteria (in ₹)1Micro EnterprisesInvestment <= 1 cr and Turnover <= 5 cr2Small EnterprisesInvestment <= 10 cr and Turnover <= 50 cr3Medium EnterprisesInvestment <= 50 cr and Turnover <= 250 cr
Businesses that are declared as MSMEs and within specific sectors and criteria can then apply for "priority sector" lending to help with business expenses; banks have annual targets set by the Prime Minister's Task Force on MSMEs for year on year increases of lending to various categories of MSMEs. MSME is considered a key contributor to India's growth and contributes 48% to India's total export. Indonesia
In Indonesia, the government defines micro, small, and medium enterprises (Indonesian: usaha mikro kecil menengah, UMKM) based on their assets and revenues according to Law No. 20/2008:
Type Maximum assets, Rp Gross Revenue, Rp Number of Employee Statistics Indonesia Micro maximum 50,000,000 maximum 300,000,000 1 4 Small 50,000,000 500,000,000 300,000,000 2,500,000,000 5 9 Medium 500,000,000 10,000,000,000 2,500,000,000 50,000,000,000 20 99 Large >10,000,000,000 >50,000,000,000 >99
An annual revenue of Rp 50 billion is approximately equal to US$3.1 million as of April 2024. Despite their significant contribution to GDP and job creation, Indonesian MSMEs confront a number of obstacles. One of the most significant is capital access: 60 70 percent of MSMEs lack access to financial institutions and their funding options. Other restrictions include inadequate infrastructure, difficulties acquiring company licences and permissions, high tax rates, political insecurity, and improving their brand image in the digital era. 21st century businesses strategically use both their websites and social media in order to advertise their products and control their branding. Quality content on both information streams will positively affect branding and attract customers. The People's Business Credit (Kredit Usaha Rakyat, or KUR [id]) was established in 2007 by President Yudhoyono to extend credit to businesses that were considered "feasible but not bankable". Bank Rakyat Indonesia conducts more than half of KUR lending nationwide. In Jakarta, the capital city of Indonesia, 529 MSMEs with the potential to be funded have been identified by Bank Indonesia. Economy Sector Number of Companies Processing Industry 151 Health Services and Social Activities 1 Rental leasing services without option rights, employment, travel agents and other business support 9 Professional, Scientific And Technical Services 11 Other Service Activities 21 Arts, Entertainment And Recreation 1 Construction 2 Water Procurement, Waste Management And Recycling, Waste And Garbage Disposal And Cleaning 1 Provision of Accommodation and Provision of Food and Drink 80 Wholesale and retail trade of car and motorcycle repair and maintenance 236 Agriculture, Forestry, and Fisheries 16
Philippines
According to the Department of Trade and Industry's 2020 List of Establishments report, there are 957,620 registered business enterprises operating in the country, composed of 99.51% MSMEs and 0.49% large firms. The MSMEs consist of 88.77% microenterprises, 10.25% small enterprises, and 0.49% medium enterprises. Among the top industry sectors include (1) wholesale and retail trade; repair of motor vehicles and motorcycles (445,386); (2) accommodation and food service activities (134,046); (3) manufacturing (110,916); (4) other service activities (62,376); and (5) financial and insurance activities (45,558) which accounted for about 83.77% of the total number of MSME establishments. Prior to the pandemic, MSMEs generated more than 5.38 million jobs or 62.66% of the country's total employment with a 29.38% share from micro enterprises followed by 25.78% and 7.50% for small and medium enterprises. Europe
European Union
Small companies are important to the European economy as they account for 99.8% of non financial enterprises in the European Union (EU) and employ two thirds of the workforce in the EU. The majority of European firms are small and medium sized enterprises (SMEs), employing over 100 million people. Due to the COVID 19 pandemic, a large majority of SMEs saw a decline in revenue during 2020 2021. Medium sized businesses (or mid caps) play an important role in the European economy, accounting for a considerable part of employment and wealth production. According to a recent European Commission analysis, mid cap companies (250 3000 people) make up about 17% of total employment and 21% of turnover in the EU27 business sector. Micro firms (with fewer than nine employees) employ 38% of the total workforce, while SMEs with fewer than 250 employees account for 34.4%. Larger (XL) firms with 3,000 or more employees account for 10.1% of overall employment in EU business sectors. According to Eurostat SBS statistics, in 2021, tiny enterprises (0 9 workers) and SMEs (excluding micro firms) employed around 30% and 34.5% of the entire workforce in EU27 business sectors, while bigger firms (250+ employees) contributed for 36.4% of overall employment. The pandemic has had a greater impact on SMEs than on large businesses, with an average sales loss of 26% versus 23% for large businesses. Government assistance appears to have benefited SMEs more than large corporations among the companies that do have overdraft facilities, indicating a successful application of policies to ease financial limitations for SMEs even when they receive help from the banking sector. The EIB Group contributed more than €16.35 billion to small and medium sized firms in 2022. SMEs were more quick in altering output during the pandemic, despite the intensity of the shock. In reaction to the crisis, one third of major enterprises altered their output or services, compared to 37% of SMEs. The criteria for defining the size of a business differ from country to country, with many countries having programs of business rate reduction and financial subsidy for SMEs. According to the European Commission, SMEs are enterprises which meet the following definition of staff headcount and either the turnover or balance sheet total definitions:
Company category Staff headcount Turnover Balance sheet total Medium sized < 250 ≤ €50 million ≤ €43 million Small < 50 ≤ €10 million ≤ €10 million Micro < 10 ≤ €2 million ≤ €2 million
In July 2011, the European Commission said it would open a consultation on the definition of SMEs in 2012. A consultation document was issued on 6 February 2018 and the consultation period closed on 6 May 2018. as of November 2019, no conclusions or responses have yet emerged. In Europe, there are three broad parameters that define SMEs:
Micro enterprises have up to 10 employees
Small enterprises have up to 50 employees
Medium sized enterprises have up to 250 employees. The European definition of SME follows: "The category of micro, small and medium sized enterprises (SMEs) is made up of enterprises which employ fewer than 250 persons and which have an annual turnover not exceeding 50 million euro, and/or an annual balance sheet total not exceeding 43 million euro." In order to prepare for an evaluation and revision of some features of the small and medium sized enterprises definition European Union established public consultation period from 6 February 2018 to 6 May 2018. Public consultation is available for all EU member country citizens and organizations. Especially, national and regional authorities, enterprises, business associations or organizations, venture capital providers, research and academic institutions, and individual citizens are expected as the main contributors. EU member states have had individual definitions of what constitutes an SME. For example, the definition in Germany had a limit of 255 employees, while in Belgium it could have been 100. The result is that while a Belgian business of 249 employees would be taxed at full rate in Belgium, it would nevertheless be eligible for SME subsidy under a European labelled programme. SMEs are a crucial element in the supplier network of large enterprises which are already on their way towards Industry 4.0. According to German economist Hans Heinrich Bass, "empirical research on SME as well as policies to promote SME have a long tradition in [West] Germany, dating back into the 19th century. Until the mid 20th century, most researchers considered SME as an impediment to further economic development and SME policies were thus designed in the framework of social policies. Only the Ordoliberalism school, the founding fathers of Germany's social market economy, discovered their strengths, considered SME as a solution to mid 20th century economic problems (mass unemployment, abuse of economic power), and laid the foundations for non selective (functional) industrial policies to promote SMEs." Only around 20% of European SMEs are substantially digitalized, compared to almost 50% of major businesses. Small and medium sized companies make up 56.2% of the non financial sector. Smaller companies account for more than 60% of the value contributed to the non financial sector in Belgium, Italy, and Spain, three of the nations worst hit by the COVID 19 pandemic. An estimated 50% of Europe's small firms may fail because they lack the substantial financial reserves required to weather the crisis. With around 338,000 functioning in Bulgaria in 2022, SMEs and mid caps are major contributors in the Bulgarian economy. They also employ over 75% of the workforce and create 65% of the economy's added value. The results of an EU survey conducted in 2021 suggest that during the pandemic, in countries with larger fiscal packages, SMEs were on average more likely to experience bankruptcy even after controlling for the size of the shock, the use of bank financing, and country and sector fixed effects. When policy assistance rises by 1% of GDP, the probabilities of bankruptcy for a SME are 2.7 times higher than for a non SME. Credit limitations are especially difficult for SMEs and new businesses to overcome. Credit constraints affect 24% of SMEs and 27% of young businesses. Poland
The SME sector in Poland generates almost 50% of the GDP, and out of that, for instance, in 2011, micro companies generated 29.6%, small companies 7.7%, and medium companies 10.4% (big companies 24.0%; other entities 16.5%, and revenues from customs duties and taxes generated 11.9%). In 2011, out of the total of 1,784,603 entities operating in Poland, merely 3,189 were classified as "large", so 1,781,414 were micro, small, or medium. SMEs employed 6.3 million people out of the total of 9.0 million of labour employed in the private sector. In Poland in 2011 there were 36.2 SMEs per 1,000 inhabitants. Nearly seven million people are employed by small businesses in Poland, which accounts for around half of the country's GDP, yet smaller businesses are less likely than larger ones to invest in strategies to combat climate change or boost energy efficiency. In October 2021, the Bank Ochrony rodowiska, a Polish bank that specializes in funding environmental protection initiatives received €75 million from the European Investment Bank (EIB) for these small enterprises. The Polish bank wants to use at least 50% of the loan for initiatives with a clear emphasis on tackling climate change, such improving building energy efficiency or turning to renewable energy sources like solar power. The money is set to be distributed across Poland, with around 80% of it projected to go to cohesive regions. Very small companies are called in the UK micro entities, which have simpler financial reporting requirements. Such micro enterprises must meet any two of the following criteria: balance sheet £316,000 or less; turnover £632,000 or less; employees 10 or less. Many small and medium sized businesses form part of the UK's currently growing Mittelstand, or Brittelstand'' as it is also sometimes named. These are businesses in Britain that are not only small or medium but also have a much broader set of values and more elastic definition. The Department for Business Innovation and Skills estimated that at the start of 2014, 99.3% of UK private sector businesses were SMEs, with their £1.6 trillion annual turnover accounting for 47% of private sector turnover. In order to support SMEs, the UK government set a target in 2010 "that 25% of government’s spend, either directly or in supply chains, goes to SMEs by 2015"; it achieved this by 2013.
Small and medium sized enterprises (SMEs) or small and medium sized businesses (SMBs) are businesses whose personnel and revenue numbers fall below certain limits. The abbreviation "SME" is used by international organizations such as the World Bank, the OECD, European Union, the United Nations, and the World Trade Organization (WTO). In any given national economy, SMEs sometimes outnumber large companies by a wide margin and also employ many more people. For example, Australian SMEs makeup 98% of all Australian businesses, produce one third of the total GDP (gross domestic product) and employ 4.7 million people. In Chile, in the commercial year 2014, 98.5% of the firms were classified as SMEs. In Tunisia, the self employed workers alone account for about 28% of the total non farm employment, and firms with fewer than 100 employees account for about 62% of total employment. The United States' SMEs generate half of all U. S. jobs, but only 40% of GDP. Developing countries tend to have a larger share of small and medium sized enterprises. Although they create more new jobs than large firms, SMEs also suffer the majority of job destruction/contraction. According to the World Bank Group's 2021 FINDEX database, there is a $1.7 trillion funding gap for formal, women owned micro, small, and medium sized enterprises. Additionally, over 68% of small women owned firms lack access to finance.' Overview
SMEs are important for economic and social reasons, given the sector's role in employment. Due to their sizes, SMEs are heavily influenced by their Chief Executive Officer, a. k. a. CEOs. The CEOs of SMEs are often the founders, owners, and managers of the SMEs. The duties of the CEO in a SME mirror those of the CEO of a large company: the CEO needs to strategically allocate their time, energy, and assets to direct the SMEs. Typically, the CEO is the strategist, champion and leader for developing the SME or the prime reason for the business failing. At the employee level, Petrakis and Kostis (2012) explore the role of interpersonal trust and knowledge in the number of small and medium enterprises. They conclude that knowledge positively affects the number of SMEs, which in turn positively affects interpersonal trust. Note that the empirical results indicate that interpersonal trust does not affect the number of SMEs. Therefore, although knowledge development can reinforce SMEs, trust becomes widespread in a society when the number of SMEs is greater. Legal boundary on SMEs around the world
Multilateral organizations have been criticized for using one measure for all. The legal boundary of SMEs around the world vary, and below is a list of the upper limits of SMEs in some countries. Africa
African small businesses frequently struggle to get the cash they require to thrive. According to the SME Finance Forum, the formal financing gap for African SMEs averaged 17% of GDP across the 43 countries assessed in 2017. According to the World Bank, women own 58% of all MSMEs in Africa. The European Investment Bank's Banking in Africa survey, 2021 suggests that most of the responding banks had a non performing loan (NPL) ratio of at least 5%. NPLs account for at least 10% of the SME portfolio in approximately one third of African banks. Furthermore, 50% of the banks had at least 5% of their SME portfolio under the moratorium, and 40% had at least 5% of SME loans under some type of restructuring. Somalia
In Somalia, the term is SME (for "small, medium, and micro enterprises"); elsewhere in Africa, MSME stands for "micro, small, and medium enterprises". An SME is defined as a small business that has more than 30 employees but less than 250 employees. South Africa
In the National Small Business Amendment Act 2004, micro businesses in the different sectors, varying from the manufacturing to the retail sectors, are defined as businesses with five or fewer employees and a turnover of up to R100,000 ZAR ($6,900). Very small businesses employ between 6 and 20 employees, while small businesses employ between 21 and 50 employees. The upper limit for turnover in a small business varies from R1 million ($69,200) in the agricultural sector to R13 million ($899,800) in the catering, accommodations and other trade sectors as well as in the manufacturing sector, with a maximum of R32 million ($2,214,800) in the wholesale trade sector. Medium sized businesses''' usually employ up to 200 people (100 in the agricultural sector), and the maximum turnover varies from R5 million ($346,100) in the agricultural sector to R51 ($3,529,800) million in the manufacturing sector and R64 ($4,429,600) million in the wholesale trade, commercial agents and allied services sector. A comprehensive definition of an SME in South Africa is, therefore, an enterprise with one or more of the following characteristics:
Fewer than 200 employees,
Annual turnover of less than R64 million,
Capital assets of less than R10 million,
Direct managerial involvement by owners
Asia
SMEs account for nearly 90% of all company entities in developing Asian countries and are the principal private sector employers, supplying 50 80% of all jobs. SMEs cover 97 99% of all firms in South east Asia, contributing considerably to each country's GDP—for example, 46% in Singapore, 57% in Indonesia, and over 40% in other nations. 98% of business establishments in Hong Kong are defined as SMEs and employed 45% of the work force. India
India defines Micro, Small and Medium Enterprises based on dual criteria of investment and turnover. This definition is provided in Section 7 of Micro, Small & Medium Enterprises Development Act, 2006 (MSMED Act) and was notified in September 2006. The Act provides for the classification of enterprises based on their investment size and the nature of the activity undertaken by that enterprise. As per MSMED Act, enterprises are classified into two categories manufacturing enterprises and service enterprises. For each of these categories, a definition is given to explain what constitutes a micro enterprise or a small enterprise or a medium enterprise. If an enterprise does not fall under the above categories, it would be considered a large scale enterprise. In June 2020, India updated the definition as follows:
+Sr NoClassificationCriteria (in ₹)1Micro EnterprisesInvestment <= 1 cr and Turnover <= 5 cr2Small EnterprisesInvestment <= 10 cr and Turnover <= 50 cr3Medium EnterprisesInvestment <= 50 cr and Turnover <= 250 cr
Businesses that are declared as MSMEs and within specific sectors and criteria can then apply for "priority sector" lending to help with business expenses; banks have annual targets set by the Prime Minister's Task Force on MSMEs for year on year increases of lending to various categories of MSMEs. MSME is considered a key contributor to India's growth and contributes 48% to India's total export. Indonesia
In Indonesia, the government defines micro, small, and medium enterprises (Indonesian: usaha mikro kecil menengah, UMKM) based on their assets and revenues according to Law No. 20/2008:
Type Maximum assets, Rp Gross Revenue, Rp Number of Employee Statistics Indonesia Micro maximum 50,000,000 maximum 300,000,000 1 4 Small 50,000,000 500,000,000 300,000,000 2,500,000,000 5 9 Medium 500,000,000 10,000,000,000 2,500,000,000 50,000,000,000 20 99 Large >10,000,000,000 >50,000,000,000 >99
An annual revenue of Rp 50 billion is approximately equal to US$3.1 million as of April 2024. Despite their significant contribution to GDP and job creation, Indonesian MSMEs confront a number of obstacles. One of the most significant is capital access: 60 70 percent of MSMEs lack access to financial institutions and their funding options. Other restrictions include inadequate infrastructure, difficulties acquiring company licences and permissions, high tax rates, political insecurity, and improving their brand image in the digital era. 21st century businesses strategically use both their websites and social media in order to advertise their products and control their branding. Quality content on both information streams will positively affect branding and attract customers. The People's Business Credit (Kredit Usaha Rakyat, or KUR [id]) was established in 2007 by President Yudhoyono to extend credit to businesses that were considered "feasible but not bankable". Bank Rakyat Indonesia conducts more than half of KUR lending nationwide. In Jakarta, the capital city of Indonesia, 529 MSMEs with the potential to be funded have been identified by Bank Indonesia. Economy Sector Number of Companies Processing Industry 151 Health Services and Social Activities 1 Rental leasing services without option rights, employment, travel agents and other business support 9 Professional, Scientific And Technical Services 11 Other Service Activities 21 Arts, Entertainment And Recreation 1 Construction 2 Water Procurement, Waste Management And Recycling, Waste And Garbage Disposal And Cleaning 1 Provision of Accommodation and Provision of Food and Drink 80 Wholesale and retail trade of car and motorcycle repair and maintenance 236 Agriculture, Forestry, and Fisheries 16
Philippines
According to the Department of Trade and Industry's 2020 List of Establishments report, there are 957,620 registered business enterprises operating in the country, composed of 99.51% MSMEs and 0.49% large firms. The MSMEs consist of 88.77% microenterprises, 10.25% small enterprises, and 0.49% medium enterprises. Among the top industry sectors include (1) wholesale and retail trade; repair of motor vehicles and motorcycles (445,386); (2) accommodation and food service activities (134,046); (3) manufacturing (110,916); (4) other service activities (62,376); and (5) financial and insurance activities (45,558) which accounted for about 83.77% of the total number of MSME establishments. Prior to the pandemic, MSMEs generated more than 5.38 million jobs or 62.66% of the country's total employment with a 29.38% share from micro enterprises followed by 25.78% and 7.50% for small and medium enterprises. Europe
European Union
Small companies are important to the European economy as they account for 99.8% of non financial enterprises in the European Union (EU) and employ two thirds of the workforce in the EU. The majority of European firms are small and medium sized enterprises (SMEs), employing over 100 million people. Due to the COVID 19 pandemic, a large majority of SMEs saw a decline in revenue during 2020 2021. Medium sized businesses (or mid caps) play an important role in the European economy, accounting for a considerable part of employment and wealth production. According to a recent European Commission analysis, mid cap companies (250 3000 people) make up about 17% of total employment and 21% of turnover in the EU27 business sector. Micro firms (with fewer than nine employees) employ 38% of the total workforce, while SMEs with fewer than 250 employees account for 34.4%. Larger (XL) firms with 3,000 or more employees account for 10.1% of overall employment in EU business sectors. According to Eurostat SBS statistics, in 2021, tiny enterprises (0 9 workers) and SMEs (excluding micro firms) employed around 30% and 34.5% of the entire workforce in EU27 business sectors, while bigger firms (250+ employees) contributed for 36.4% of overall employment. The pandemic has had a greater impact on SMEs than on large businesses, with an average sales loss of 26% versus 23% for large businesses. Government assistance appears to have benefited SMEs more than large corporations among the companies that do have overdraft facilities, indicating a successful application of policies to ease financial limitations for SMEs even when they receive help from the banking sector. The EIB Group contributed more than €16.35 billion to small and medium sized firms in 2022. SMEs were more quick in altering output during the pandemic, despite the intensity of the shock. In reaction to the crisis, one third of major enterprises altered their output or services, compared to 37% of SMEs. The criteria for defining the size of a business differ from country to country, with many countries having programs of business rate reduction and financial subsidy for SMEs. According to the European Commission, SMEs are enterprises which meet the following definition of staff headcount and either the turnover or balance sheet total definitions:
Company category Staff headcount Turnover Balance sheet total Medium sized < 250 ≤ €50 million ≤ €43 million Small < 50 ≤ €10 million ≤ €10 million Micro < 10 ≤ €2 million ≤ €2 million
In July 2011, the European Commission said it would open a consultation on the definition of SMEs in 2012. A consultation document was issued on 6 February 2018 and the consultation period closed on 6 May 2018. as of November 2019, no conclusions or responses have yet emerged. In Europe, there are three broad parameters that define SMEs:
Micro enterprises have up to 10 employees
Small enterprises have up to 50 employees
Medium sized enterprises have up to 250 employees. The European definition of SME follows: "The category of micro, small and medium sized enterprises (SMEs) is made up of enterprises which employ fewer than 250 persons and which have an annual turnover not exceeding 50 million euro, and/or an annual balance sheet total not exceeding 43 million euro." In order to prepare for an evaluation and revision of some features of the small and medium sized enterprises definition European Union established public consultation period from 6 February 2018 to 6 May 2018. Public consultation is available for all EU member country citizens and organizations. Especially, national and regional authorities, enterprises, business associations or organizations, venture capital providers, research and academic institutions, and individual citizens are expected as the main contributors. EU member states have had individual definitions of what constitutes an SME. For example, the definition in Germany had a limit of 255 employees, while in Belgium it could have been 100. The result is that while a Belgian business of 249 employees would be taxed at full rate in Belgium, it would nevertheless be eligible for SME subsidy under a European labelled programme. SMEs are a crucial element in the supplier network of large enterprises which are already on their way towards Industry 4.0. According to German economist Hans Heinrich Bass, "empirical research on SME as well as policies to promote SME have a long tradition in [West] Germany, dating back into the 19th century. Until the mid 20th century, most researchers considered SME as an impediment to further economic development and SME policies were thus designed in the framework of social policies. Only the Ordoliberalism school, the founding fathers of Germany's social market economy, discovered their strengths, considered SME as a solution to mid 20th century economic problems (mass unemployment, abuse of economic power), and laid the foundations for non selective (functional) industrial policies to promote SMEs." Only around 20% of European SMEs are substantially digitalized, compared to almost 50% of major businesses. Small and medium sized companies make up 56.2% of the non financial sector. Smaller companies account for more than 60% of the value contributed to the non financial sector in Belgium, Italy, and Spain, three of the nations worst hit by the COVID 19 pandemic. An estimated 50% of Europe's small firms may fail because they lack the substantial financial reserves required to weather the crisis. With around 338,000 functioning in Bulgaria in 2022, SMEs and mid caps are major contributors in the Bulgarian economy. They also employ over 75% of the workforce and create 65% of the economy's added value. The results of an EU survey conducted in 2021 suggest that during the pandemic, in countries with larger fiscal packages, SMEs were on average more likely to experience bankruptcy even after controlling for the size of the shock, the use of bank financing, and country and sector fixed effects. When policy assistance rises by 1% of GDP, the probabilities of bankruptcy for a SME are 2.7 times higher than for a non SME. Credit limitations are especially difficult for SMEs and new businesses to overcome. Credit constraints affect 24% of SMEs and 27% of young businesses. Poland
The SME sector in Poland generates almost 50% of the GDP, and out of that, for instance, in 2011, micro companies generated 29.6%, small companies 7.7%, and medium companies 10.4% (big companies 24.0%; other entities 16.5%, and revenues from customs duties and taxes generated 11.9%). In 2011, out of the total of 1,784,603 entities operating in Poland, merely 3,189 were classified as "large", so 1,781,414 were micro, small, or medium. SMEs employed 6.3 million people out of the total of 9.0 million of labour employed in the private sector. In Poland in 2011 there were 36.2 SMEs per 1,000 inhabitants. Nearly seven million people are employed by small businesses in Poland, which accounts for around half of the country's GDP, yet smaller businesses are less likely than larger ones to invest in strategies to combat climate change or boost energy efficiency. In October 2021, the Bank Ochrony rodowiska, a Polish bank that specializes in funding environmental protection initiatives received €75 million from the European Investment Bank (EIB) for these small enterprises. The Polish bank wants to use at least 50% of the loan for initiatives with a clear emphasis on tackling climate change, such improving building energy efficiency or turning to renewable energy sources like solar power. The money is set to be distributed across Poland, with around 80% of it projected to go to cohesive regions. Very small companies are called in the UK micro entities, which have simpler financial reporting requirements. Such micro enterprises must meet any two of the following criteria: balance sheet £316,000 or less; turnover £632,000 or less; employees 10 or less. Many small and medium sized businesses form part of the UK's currently growing Mittelstand, or Brittelstand'' as it is also sometimes named. These are businesses in Britain that are not only small or medium but also have a much broader set of values and more elastic definition. The Department for Business Innovation and Skills estimated that at the start of 2014, 99.3% of UK private sector businesses were SMEs, with their £1.6 trillion annual turnover accounting for 47% of private sector turnover. In order to support SMEs, the UK government set a target in 2010 "that 25% of government’s spend, either directly or in supply chains, goes to SMEs by 2015"; it achieved this by 2013.
| № | Классификация | Критерии (в ₹) |
|---|---|---|
| 1 | Микропредприятия | Инвестиции <= 1 крор и Оборот <= 5 кроров |
| 2 | Малые предприятия | Инвестиции <= 10 кроров и Оборот <= 50 кроров |
| 3 | Средние предприятия | Инвестиции <= 50 кроров и Оборот <= 250 кроров |
Type of business with small personnel numbers
Small and medium sized enterprises (SMEs) or small and medium sized businesses (SMBs) are businesses whose personnel and revenue numbers fall below certain limits. The abbreviation "SME" is used by international organizations such as the World Bank, the OECD, European Union, the United Nations, and the World Trade Organization (WTO). In any given national economy, SMEs sometimes outnumber large companies by a wide margin and also employ many more people. For example, Australian SMEs makeup 98% of all Australian businesses, produce one third of the total GDP (gross domestic product) and employ 4.7 million people. In Chile, in the commercial year 2014, 98.5% of the firms were classified as SMEs. In Tunisia, the self employed workers alone account for about 28% of the total non farm employment, and firms with fewer than 100 employees account for about 62% of total employment. The United States' SMEs generate half of all U. S. jobs, but only 40% of GDP. Developing countries tend to have a larger share of small and medium sized enterprises. Although they create more new jobs than large firms, SMEs also suffer the majority of job destruction/contraction. According to the World Bank Group's 2021 FINDEX database, there is a $1.7 trillion funding gap for formal, women owned micro, small, and medium sized enterprises. Additionally, over 68% of small women owned firms lack access to finance.' Overview
SMEs are important for economic and social reasons, given the sector's role in employment. Due to their sizes, SMEs are heavily influenced by their Chief Executive Officer, a. k. a. CEOs. The CEOs of SMEs are often the founders, owners, and managers of the SMEs. The duties of the CEO in a SME mirror those of the CEO of a large company: the CEO needs to strategically allocate their time, energy, and assets to direct the SMEs. Typically, the CEO is the strategist, champion and leader for developing the SME or the prime reason for the business failing. At the employee level, Petrakis and Kostis (2012) explore the role of interpersonal trust and knowledge in the number of small and medium enterprises. They conclude that knowledge positively affects the number of SMEs, which in turn positively affects interpersonal trust. Note that the empirical results indicate that interpersonal trust does not affect the number of SMEs. Therefore, although knowledge development can reinforce SMEs, trust becomes widespread in a society when the number of SMEs is greater. Legal boundary on SMEs around the world
Multilateral organizations have been criticized for using one measure for all. The legal boundary of SMEs around the world vary, and below is a list of the upper limits of SMEs in some countries. Africa
African small businesses frequently struggle to get the cash they require to thrive. According to the SME Finance Forum, the formal financing gap for African SMEs averaged 17% of GDP across the 43 countries assessed in 2017. According to the World Bank, women own 58% of all MSMEs in Africa. The European Investment Bank's Banking in Africa survey, 2021 suggests that most of the responding banks had a non performing loan (NPL) ratio of at least 5%. NPLs account for at least 10% of the SME portfolio in approximately one third of African banks. Furthermore, 50% of the banks had at least 5% of their SME portfolio under the moratorium, and 40% had at least 5% of SME loans under some type of restructuring. Somalia
In Somalia, the term is SME (for "small, medium, and micro enterprises"); elsewhere in Africa, MSME stands for "micro, small, and medium enterprises". An SME is defined as a small business that has more than 30 employees but less than 250 employees. South Africa
In the National Small Business Amendment Act 2004, micro businesses in the different sectors, varying from the manufacturing to the retail sectors, are defined as businesses with five or fewer employees and a turnover of up to R100,000 ZAR ($6,900). Very small businesses employ between 6 and 20 employees, while small businesses employ between 21 and 50 employees. The upper limit for turnover in a small business varies from R1 million ($69,200) in the agricultural sector to R13 million ($899,800) in the catering, accommodations and other trade sectors as well as in the manufacturing sector, with a maximum of R32 million ($2,214,800) in the wholesale trade sector. Medium sized businesses''' usually employ up to 200 people (100 in the agricultural sector), and the maximum turnover varies from R5 million ($346,100) in the agricultural sector to R51 ($3,529,800) million in the manufacturing sector and R64 ($4,429,600) million in the wholesale trade, commercial agents and allied services sector. A comprehensive definition of an SME in South Africa is, therefore, an enterprise with one or more of the following characteristics:
Fewer than 200 employees,
Annual turnover of less than R64 million,
Capital assets of less than R10 million,
Direct managerial involvement by owners
Asia
SMEs account for nearly 90% of all company entities in developing Asian countries and are the principal private sector employers, supplying 50 80% of all jobs. SMEs cover 97 99% of all firms in South east Asia, contributing considerably to each country's GDP—for example, 46% in Singapore, 57% in Indonesia, and over 40% in other nations. 98% of business establishments in Hong Kong are defined as SMEs and employed 45% of the work force. India
India defines Micro, Small and Medium Enterprises based on dual criteria of investment and turnover. This definition is provided in Section 7 of Micro, Small & Medium Enterprises Development Act, 2006 (MSMED Act) and was notified in September 2006. The Act provides for the classification of enterprises based on their investment size and the nature of the activity undertaken by that enterprise. As per MSMED Act, enterprises are classified into two categories manufacturing enterprises and service enterprises. For each of these categories, a definition is given to explain what constitutes a micro enterprise or a small enterprise or a medium enterprise. If an enterprise does not fall under the above categories, it would be considered a large scale enterprise. In June 2020, India updated the definition as follows:
+Sr NoClassificationCriteria (in ₹)1Micro EnterprisesInvestment <= 1 cr and Turnover <= 5 cr2Small EnterprisesInvestment <= 10 cr and Turnover <= 50 cr3Medium EnterprisesInvestment <= 50 cr and Turnover <= 250 cr
Businesses that are declared as MSMEs and within specific sectors and criteria can then apply for "priority sector" lending to help with business expenses; banks have annual targets set by the Prime Minister's Task Force on MSMEs for year on year increases of lending to various categories of MSMEs. MSME is considered a key contributor to India's growth and contributes 48% to India's total export. Indonesia
In Indonesia, the government defines micro, small, and medium enterprises (Indonesian: usaha mikro kecil menengah, UMKM) based on their assets and revenues according to Law No. 20/2008:
Type Maximum assets, Rp Gross Revenue, Rp Number of Employee Statistics Indonesia Micro maximum 50,000,000 maximum 300,000,000 1 4 Small 50,000,000 500,000,000 300,000,000 2,500,000,000 5 9 Medium 500,000,000 10,000,000,000 2,500,000,000 50,000,000,000 20 99 Large >10,000,000,000 >50,000,000,000 >99
An annual revenue of Rp 50 billion is approximately equal to US$3.1 million as of April 2024. Despite their significant contribution to GDP and job creation, Indonesian MSMEs confront a number of obstacles. One of the most significant is capital access: 60 70 percent of MSMEs lack access to financial institutions and their funding options. Other restrictions include inadequate infrastructure, difficulties acquiring company licences and permissions, high tax rates, political insecurity, and improving their brand image in the digital era. 21st century businesses strategically use both their websites and social media in order to advertise their products and control their branding. Quality content on both information streams will positively affect branding and attract customers. The People's Business Credit (Kredit Usaha Rakyat, or KUR [id]) was established in 2007 by President Yudhoyono to extend credit to businesses that were considered "feasible but not bankable". Bank Rakyat Indonesia conducts more than half of KUR lending nationwide. In Jakarta, the capital city of Indonesia, 529 MSMEs with the potential to be funded have been identified by Bank Indonesia. Economy Sector Number of Companies Processing Industry 151 Health Services and Social Activities 1 Rental leasing services without option rights, employment, travel agents and other business support 9 Professional, Scientific And Technical Services 11 Other Service Activities 21 Arts, Entertainment And Recreation 1 Construction 2 Water Procurement, Waste Management And Recycling, Waste And Garbage Disposal And Cleaning 1 Provision of Accommodation and Provision of Food and Drink 80 Wholesale and retail trade of car and motorcycle repair and maintenance 236 Agriculture, Forestry, and Fisheries 16
Philippines
According to the Department of Trade and Industry's 2020 List of Establishments report, there are 957,620 registered business enterprises operating in the country, composed of 99.51% MSMEs and 0.49% large firms. The MSMEs consist of 88.77% microenterprises, 10.25% small enterprises, and 0.49% medium enterprises. Among the top industry sectors include (1) wholesale and retail trade; repair of motor vehicles and motorcycles (445,386); (2) accommodation and food service activities (134,046); (3) manufacturing (110,916); (4) other service activities (62,376); and (5) financial and insurance activities (45,558) which accounted for about 83.77% of the total number of MSME establishments. Prior to the pandemic, MSMEs generated more than 5.38 million jobs or 62.66% of the country's total employment with a 29.38% share from micro enterprises followed by 25.78% and 7.50% for small and medium enterprises. Europe
European Union
Small companies are important to the European economy as they account for 99.8% of non financial enterprises in the European Union (EU) and employ two thirds of the workforce in the EU. The majority of European firms are small and medium sized enterprises (SMEs), employing over 100 million people. Due to the COVID 19 pandemic, a large majority of SMEs saw a decline in revenue during 2020 2021. Medium sized businesses (or mid caps) play an important role in the European economy, accounting for a considerable part of employment and wealth production. According to a recent European Commission analysis, mid cap companies (250 3000 people) make up about 17% of total employment and 21% of turnover in the EU27 business sector. Micro firms (with fewer than nine employees) employ 38% of the total workforce, while SMEs with fewer than 250 employees account for 34.4%. Larger (XL) firms with 3,000 or more employees account for 10.1% of overall employment in EU business sectors. According to Eurostat SBS statistics, in 2021, tiny enterprises (0 9 workers) and SMEs (excluding micro firms) employed around 30% and 34.5% of the entire workforce in EU27 business sectors, while bigger firms (250+ employees) contributed for 36.4% of overall employment. The pandemic has had a greater impact on SMEs than on large businesses, with an average sales loss of 26% versus 23% for large businesses. Government assistance appears to have benefited SMEs more than large corporations among the companies that do have overdraft facilities, indicating a successful application of policies to ease financial limitations for SMEs even when they receive help from the banking sector. The EIB Group contributed more than €16.35 billion to small and medium sized firms in 2022. SMEs were more quick in altering output during the pandemic, despite the intensity of the shock. In reaction to the crisis, one third of major enterprises altered their output or services, compared to 37% of SMEs. The criteria for defining the size of a business differ from country to country, with many countries having programs of business rate reduction and financial subsidy for SMEs. According to the European Commission, SMEs are enterprises which meet the following definition of staff headcount and either the turnover or balance sheet total definitions:
Company category Staff headcount Turnover Balance sheet total Medium sized < 250 ≤ €50 million ≤ €43 million Small < 50 ≤ €10 million ≤ €10 million Micro < 10 ≤ €2 million ≤ €2 million
In July 2011, the European Commission said it would open a consultation on the definition of SMEs in 2012. A consultation document was issued on 6 February 2018 and the consultation period closed on 6 May 2018. as of November 2019, no conclusions or responses have yet emerged. In Europe, there are three broad parameters that define SMEs:
Micro enterprises have up to 10 employees
Small enterprises have up to 50 employees
Medium sized enterprises have up to 250 employees. The European definition of SME follows: "The category of micro, small and medium sized enterprises (SMEs) is made up of enterprises which employ fewer than 250 persons and which have an annual turnover not exceeding 50 million euro, and/or an annual balance sheet total not exceeding 43 million euro." In order to prepare for an evaluation and revision of some features of the small and medium sized enterprises definition European Union established public consultation period from 6 February 2018 to 6 May 2018. Public consultation is available for all EU member country citizens and organizations. Especially, national and regional authorities, enterprises, business associations or organizations, venture capital providers, research and academic institutions, and individual citizens are expected as the main contributors. EU member states have had individual definitions of what constitutes an SME. For example, the definition in Germany had a limit of 255 employees, while in Belgium it could have been 100. The result is that while a Belgian business of 249 employees would be taxed at full rate in Belgium, it would nevertheless be eligible for SME subsidy under a European labelled programme. SMEs are a crucial element in the supplier network of large enterprises which are already on their way towards Industry 4.0. According to German economist Hans Heinrich Bass, "empirical research on SME as well as policies to promote SME have a long tradition in [West] Germany, dating back into the 19th century. Until the mid 20th century, most researchers considered SME as an impediment to further economic development and SME policies were thus designed in the framework of social policies. Only the Ordoliberalism school, the founding fathers of Germany's social market economy, discovered their strengths, considered SME as a solution to mid 20th century economic problems (mass unemployment, abuse of economic power), and laid the foundations for non selective (functional) industrial policies to promote SMEs." Only around 20% of European SMEs are substantially digitalized, compared to almost 50% of major businesses. Small and medium sized companies make up 56.2% of the non financial sector. Smaller companies account for more than 60% of the value contributed to the non financial sector in Belgium, Italy, and Spain, three of the nations worst hit by the COVID 19 pandemic. An estimated 50% of Europe's small firms may fail because they lack the substantial financial reserves required to weather the crisis. With around 338,000 functioning in Bulgaria in 2022, SMEs and mid caps are major contributors in the Bulgarian economy. They also employ over 75% of the workforce and create 65% of the economy's added value. The results of an EU survey conducted in 2021 suggest that during the pandemic, in countries with larger fiscal packages, SMEs were on average more likely to experience bankruptcy even after controlling for the size of the shock, the use of bank financing, and country and sector fixed effects. When policy assistance rises by 1% of GDP, the probabilities of bankruptcy for a SME are 2.7 times higher than for a non SME. Credit limitations are especially difficult for SMEs and new businesses to overcome. Credit constraints affect 24% of SMEs and 27% of young businesses. Poland
The SME sector in Poland generates almost 50% of the GDP, and out of that, for instance, in 2011, micro companies generated 29.6%, small companies 7.7%, and medium companies 10.4% (big companies 24.0%; other entities 16.5%, and revenues from customs duties and taxes generated 11.9%). In 2011, out of the total of 1,784,603 entities operating in Poland, merely 3,189 were classified as "large", so 1,781,414 were micro, small, or medium. SMEs employed 6.3 million people out of the total of 9.0 million of labour employed in the private sector. In Poland in 2011 there were 36.2 SMEs per 1,000 inhabitants. Nearly seven million people are employed by small businesses in Poland, which accounts for around half of the country's GDP, yet smaller businesses are less likely than larger ones to invest in strategies to combat climate change or boost energy efficiency. In October 2021, the Bank Ochrony rodowiska, a Polish bank that specializes in funding environmental protection initiatives received €75 million from the European Investment Bank (EIB) for these small enterprises. The Polish bank wants to use at least 50% of the loan for initiatives with a clear emphasis on tackling climate change, such improving building energy efficiency or turning to renewable energy sources like solar power. The money is set to be distributed across Poland, with around 80% of it projected to go to cohesive regions. Very small companies are called in the UK micro entities, which have simpler financial reporting requirements. Such micro enterprises must meet any two of the following criteria: balance sheet £316,000 or less; turnover £632,000 or less; employees 10 or less. Many small and medium sized businesses form part of the UK's currently growing Mittelstand, or Brittelstand'' as it is also sometimes named. These are businesses in Britain that are not only small or medium but also have a much broader set of values and more elastic definition. The Department for Business Innovation and Skills estimated that at the start of 2014, 99.3% of UK private sector businesses were SMEs, with their £1.6 trillion annual turnover accounting for 47% of private sector turnover. In order to support SMEs, the UK government set a target in 2010 "that 25% of government’s spend, either directly or in supply chains, goes to SMEs by 2015"; it achieved this by 2013.
Small and medium sized enterprises (SMEs) or small and medium sized businesses (SMBs) are businesses whose personnel and revenue numbers fall below certain limits. The abbreviation "SME" is used by international organizations such as the World Bank, the OECD, European Union, the United Nations, and the World Trade Organization (WTO). In any given national economy, SMEs sometimes outnumber large companies by a wide margin and also employ many more people. For example, Australian SMEs makeup 98% of all Australian businesses, produce one third of the total GDP (gross domestic product) and employ 4.7 million people. In Chile, in the commercial year 2014, 98.5% of the firms were classified as SMEs. In Tunisia, the self employed workers alone account for about 28% of the total non farm employment, and firms with fewer than 100 employees account for about 62% of total employment. The United States' SMEs generate half of all U. S. jobs, but only 40% of GDP. Developing countries tend to have a larger share of small and medium sized enterprises. Although they create more new jobs than large firms, SMEs also suffer the majority of job destruction/contraction. According to the World Bank Group's 2021 FINDEX database, there is a $1.7 trillion funding gap for formal, women owned micro, small, and medium sized enterprises. Additionally, over 68% of small women owned firms lack access to finance.' Overview
SMEs are important for economic and social reasons, given the sector's role in employment. Due to their sizes, SMEs are heavily influenced by their Chief Executive Officer, a. k. a. CEOs. The CEOs of SMEs are often the founders, owners, and managers of the SMEs. The duties of the CEO in a SME mirror those of the CEO of a large company: the CEO needs to strategically allocate their time, energy, and assets to direct the SMEs. Typically, the CEO is the strategist, champion and leader for developing the SME or the prime reason for the business failing. At the employee level, Petrakis and Kostis (2012) explore the role of interpersonal trust and knowledge in the number of small and medium enterprises. They conclude that knowledge positively affects the number of SMEs, which in turn positively affects interpersonal trust. Note that the empirical results indicate that interpersonal trust does not affect the number of SMEs. Therefore, although knowledge development can reinforce SMEs, trust becomes widespread in a society when the number of SMEs is greater. Legal boundary on SMEs around the world
Multilateral organizations have been criticized for using one measure for all. The legal boundary of SMEs around the world vary, and below is a list of the upper limits of SMEs in some countries. Africa
African small businesses frequently struggle to get the cash they require to thrive. According to the SME Finance Forum, the formal financing gap for African SMEs averaged 17% of GDP across the 43 countries assessed in 2017. According to the World Bank, women own 58% of all MSMEs in Africa. The European Investment Bank's Banking in Africa survey, 2021 suggests that most of the responding banks had a non performing loan (NPL) ratio of at least 5%. NPLs account for at least 10% of the SME portfolio in approximately one third of African banks. Furthermore, 50% of the banks had at least 5% of their SME portfolio under the moratorium, and 40% had at least 5% of SME loans under some type of restructuring. Somalia
In Somalia, the term is SME (for "small, medium, and micro enterprises"); elsewhere in Africa, MSME stands for "micro, small, and medium enterprises". An SME is defined as a small business that has more than 30 employees but less than 250 employees. South Africa
In the National Small Business Amendment Act 2004, micro businesses in the different sectors, varying from the manufacturing to the retail sectors, are defined as businesses with five or fewer employees and a turnover of up to R100,000 ZAR ($6,900). Very small businesses employ between 6 and 20 employees, while small businesses employ between 21 and 50 employees. The upper limit for turnover in a small business varies from R1 million ($69,200) in the agricultural sector to R13 million ($899,800) in the catering, accommodations and other trade sectors as well as in the manufacturing sector, with a maximum of R32 million ($2,214,800) in the wholesale trade sector. Medium sized businesses''' usually employ up to 200 people (100 in the agricultural sector), and the maximum turnover varies from R5 million ($346,100) in the agricultural sector to R51 ($3,529,800) million in the manufacturing sector and R64 ($4,429,600) million in the wholesale trade, commercial agents and allied services sector. A comprehensive definition of an SME in South Africa is, therefore, an enterprise with one or more of the following characteristics:
Fewer than 200 employees,
Annual turnover of less than R64 million,
Capital assets of less than R10 million,
Direct managerial involvement by owners
Asia
SMEs account for nearly 90% of all company entities in developing Asian countries and are the principal private sector employers, supplying 50 80% of all jobs. SMEs cover 97 99% of all firms in South east Asia, contributing considerably to each country's GDP—for example, 46% in Singapore, 57% in Indonesia, and over 40% in other nations. 98% of business establishments in Hong Kong are defined as SMEs and employed 45% of the work force. India
India defines Micro, Small and Medium Enterprises based on dual criteria of investment and turnover. This definition is provided in Section 7 of Micro, Small & Medium Enterprises Development Act, 2006 (MSMED Act) and was notified in September 2006. The Act provides for the classification of enterprises based on their investment size and the nature of the activity undertaken by that enterprise. As per MSMED Act, enterprises are classified into two categories manufacturing enterprises and service enterprises. For each of these categories, a definition is given to explain what constitutes a micro enterprise or a small enterprise or a medium enterprise. If an enterprise does not fall under the above categories, it would be considered a large scale enterprise. In June 2020, India updated the definition as follows:
+Sr NoClassificationCriteria (in ₹)1Micro EnterprisesInvestment <= 1 cr and Turnover <= 5 cr2Small EnterprisesInvestment <= 10 cr and Turnover <= 50 cr3Medium EnterprisesInvestment <= 50 cr and Turnover <= 250 cr
Businesses that are declared as MSMEs and within specific sectors and criteria can then apply for "priority sector" lending to help with business expenses; banks have annual targets set by the Prime Minister's Task Force on MSMEs for year on year increases of lending to various categories of MSMEs. MSME is considered a key contributor to India's growth and contributes 48% to India's total export. Indonesia
In Indonesia, the government defines micro, small, and medium enterprises (Indonesian: usaha mikro kecil menengah, UMKM) based on their assets and revenues according to Law No. 20/2008:
Type Maximum assets, Rp Gross Revenue, Rp Number of Employee Statistics Indonesia Micro maximum 50,000,000 maximum 300,000,000 1 4 Small 50,000,000 500,000,000 300,000,000 2,500,000,000 5 9 Medium 500,000,000 10,000,000,000 2,500,000,000 50,000,000,000 20 99 Large >10,000,000,000 >50,000,000,000 >99
An annual revenue of Rp 50 billion is approximately equal to US$3.1 million as of April 2024. Despite their significant contribution to GDP and job creation, Indonesian MSMEs confront a number of obstacles. One of the most significant is capital access: 60 70 percent of MSMEs lack access to financial institutions and their funding options. Other restrictions include inadequate infrastructure, difficulties acquiring company licences and permissions, high tax rates, political insecurity, and improving their brand image in the digital era. 21st century businesses strategically use both their websites and social media in order to advertise their products and control their branding. Quality content on both information streams will positively affect branding and attract customers. The People's Business Credit (Kredit Usaha Rakyat, or KUR [id]) was established in 2007 by President Yudhoyono to extend credit to businesses that were considered "feasible but not bankable". Bank Rakyat Indonesia conducts more than half of KUR lending nationwide. In Jakarta, the capital city of Indonesia, 529 MSMEs with the potential to be funded have been identified by Bank Indonesia. Economy Sector Number of Companies Processing Industry 151 Health Services and Social Activities 1 Rental leasing services without option rights, employment, travel agents and other business support 9 Professional, Scientific And Technical Services 11 Other Service Activities 21 Arts, Entertainment And Recreation 1 Construction 2 Water Procurement, Waste Management And Recycling, Waste And Garbage Disposal And Cleaning 1 Provision of Accommodation and Provision of Food and Drink 80 Wholesale and retail trade of car and motorcycle repair and maintenance 236 Agriculture, Forestry, and Fisheries 16
Philippines
According to the Department of Trade and Industry's 2020 List of Establishments report, there are 957,620 registered business enterprises operating in the country, composed of 99.51% MSMEs and 0.49% large firms. The MSMEs consist of 88.77% microenterprises, 10.25% small enterprises, and 0.49% medium enterprises. Among the top industry sectors include (1) wholesale and retail trade; repair of motor vehicles and motorcycles (445,386); (2) accommodation and food service activities (134,046); (3) manufacturing (110,916); (4) other service activities (62,376); and (5) financial and insurance activities (45,558) which accounted for about 83.77% of the total number of MSME establishments. Prior to the pandemic, MSMEs generated more than 5.38 million jobs or 62.66% of the country's total employment with a 29.38% share from micro enterprises followed by 25.78% and 7.50% for small and medium enterprises. Europe
European Union
Small companies are important to the European economy as they account for 99.8% of non financial enterprises in the European Union (EU) and employ two thirds of the workforce in the EU. The majority of European firms are small and medium sized enterprises (SMEs), employing over 100 million people. Due to the COVID 19 pandemic, a large majority of SMEs saw a decline in revenue during 2020 2021. Medium sized businesses (or mid caps) play an important role in the European economy, accounting for a considerable part of employment and wealth production. According to a recent European Commission analysis, mid cap companies (250 3000 people) make up about 17% of total employment and 21% of turnover in the EU27 business sector. Micro firms (with fewer than nine employees) employ 38% of the total workforce, while SMEs with fewer than 250 employees account for 34.4%. Larger (XL) firms with 3,000 or more employees account for 10.1% of overall employment in EU business sectors. According to Eurostat SBS statistics, in 2021, tiny enterprises (0 9 workers) and SMEs (excluding micro firms) employed around 30% and 34.5% of the entire workforce in EU27 business sectors, while bigger firms (250+ employees) contributed for 36.4% of overall employment. The pandemic has had a greater impact on SMEs than on large businesses, with an average sales loss of 26% versus 23% for large businesses. Government assistance appears to have benefited SMEs more than large corporations among the companies that do have overdraft facilities, indicating a successful application of policies to ease financial limitations for SMEs even when they receive help from the banking sector. The EIB Group contributed more than €16.35 billion to small and medium sized firms in 2022. SMEs were more quick in altering output during the pandemic, despite the intensity of the shock. In reaction to the crisis, one third of major enterprises altered their output or services, compared to 37% of SMEs. The criteria for defining the size of a business differ from country to country, with many countries having programs of business rate reduction and financial subsidy for SMEs. According to the European Commission, SMEs are enterprises which meet the following definition of staff headcount and either the turnover or balance sheet total definitions:
Company category Staff headcount Turnover Balance sheet total Medium sized < 250 ≤ €50 million ≤ €43 million Small < 50 ≤ €10 million ≤ €10 million Micro < 10 ≤ €2 million ≤ €2 million
In July 2011, the European Commission said it would open a consultation on the definition of SMEs in 2012. A consultation document was issued on 6 February 2018 and the consultation period closed on 6 May 2018. as of November 2019, no conclusions or responses have yet emerged. In Europe, there are three broad parameters that define SMEs:
Micro enterprises have up to 10 employees
Small enterprises have up to 50 employees
Medium sized enterprises have up to 250 employees. The European definition of SME follows: "The category of micro, small and medium sized enterprises (SMEs) is made up of enterprises which employ fewer than 250 persons and which have an annual turnover not exceeding 50 million euro, and/or an annual balance sheet total not exceeding 43 million euro." In order to prepare for an evaluation and revision of some features of the small and medium sized enterprises definition European Union established public consultation period from 6 February 2018 to 6 May 2018. Public consultation is available for all EU member country citizens and organizations. Especially, national and regional authorities, enterprises, business associations or organizations, venture capital providers, research and academic institutions, and individual citizens are expected as the main contributors. EU member states have had individual definitions of what constitutes an SME. For example, the definition in Germany had a limit of 255 employees, while in Belgium it could have been 100. The result is that while a Belgian business of 249 employees would be taxed at full rate in Belgium, it would nevertheless be eligible for SME subsidy under a European labelled programme. SMEs are a crucial element in the supplier network of large enterprises which are already on their way towards Industry 4.0. According to German economist Hans Heinrich Bass, "empirical research on SME as well as policies to promote SME have a long tradition in [West] Germany, dating back into the 19th century. Until the mid 20th century, most researchers considered SME as an impediment to further economic development and SME policies were thus designed in the framework of social policies. Only the Ordoliberalism school, the founding fathers of Germany's social market economy, discovered their strengths, considered SME as a solution to mid 20th century economic problems (mass unemployment, abuse of economic power), and laid the foundations for non selective (functional) industrial policies to promote SMEs." Only around 20% of European SMEs are substantially digitalized, compared to almost 50% of major businesses. Small and medium sized companies make up 56.2% of the non financial sector. Smaller companies account for more than 60% of the value contributed to the non financial sector in Belgium, Italy, and Spain, three of the nations worst hit by the COVID 19 pandemic. An estimated 50% of Europe's small firms may fail because they lack the substantial financial reserves required to weather the crisis. With around 338,000 functioning in Bulgaria in 2022, SMEs and mid caps are major contributors in the Bulgarian economy. They also employ over 75% of the workforce and create 65% of the economy's added value. The results of an EU survey conducted in 2021 suggest that during the pandemic, in countries with larger fiscal packages, SMEs were on average more likely to experience bankruptcy even after controlling for the size of the shock, the use of bank financing, and country and sector fixed effects. When policy assistance rises by 1% of GDP, the probabilities of bankruptcy for a SME are 2.7 times higher than for a non SME. Credit limitations are especially difficult for SMEs and new businesses to overcome. Credit constraints affect 24% of SMEs and 27% of young businesses. Poland
The SME sector in Poland generates almost 50% of the GDP, and out of that, for instance, in 2011, micro companies generated 29.6%, small companies 7.7%, and medium companies 10.4% (big companies 24.0%; other entities 16.5%, and revenues from customs duties and taxes generated 11.9%). In 2011, out of the total of 1,784,603 entities operating in Poland, merely 3,189 were classified as "large", so 1,781,414 were micro, small, or medium. SMEs employed 6.3 million people out of the total of 9.0 million of labour employed in the private sector. In Poland in 2011 there were 36.2 SMEs per 1,000 inhabitants. Nearly seven million people are employed by small businesses in Poland, which accounts for around half of the country's GDP, yet smaller businesses are less likely than larger ones to invest in strategies to combat climate change or boost energy efficiency. In October 2021, the Bank Ochrony rodowiska, a Polish bank that specializes in funding environmental protection initiatives received €75 million from the European Investment Bank (EIB) for these small enterprises. The Polish bank wants to use at least 50% of the loan for initiatives with a clear emphasis on tackling climate change, such improving building energy efficiency or turning to renewable energy sources like solar power. The money is set to be distributed across Poland, with around 80% of it projected to go to cohesive regions. Very small companies are called in the UK micro entities, which have simpler financial reporting requirements. Such micro enterprises must meet any two of the following criteria: balance sheet £316,000 or less; turnover £632,000 or less; employees 10 or less. Many small and medium sized businesses form part of the UK's currently growing Mittelstand, or Brittelstand'' as it is also sometimes named. These are businesses in Britain that are not only small or medium but also have a much broader set of values and more elastic definition. The Department for Business Innovation and Skills estimated that at the start of 2014, 99.3% of UK private sector businesses were SMEs, with their £1.6 trillion annual turnover accounting for 47% of private sector turnover. In order to support SMEs, the UK government set a target in 2010 "that 25% of government’s spend, either directly or in supply chains, goes to SMEs by 2015"; it achieved this by 2013.
Предприятия, которые классифицируются как МСП и соответствуют определенным секторам и критериям, могут затем подать заявку на "приоритетное" кредитование для покрытия расходов на ведение бизнеса; банки имеют годовые цели, установленные Целевой группой премьер-министра по МСП, для ежегодного увеличения кредитования различных категорий МСП. МСП считаются ключевым фактором роста Индии и обеспечивают 48% от общего экспорта Индии.
Type of business with small personnel numbers
Small and medium sized enterprises (SMEs) or small and medium sized businesses (SMBs) are businesses whose personnel and revenue numbers fall below certain limits. The abbreviation "SME" is used by international organizations such as the World Bank, the OECD, European Union, the United Nations, and the World Trade Organization (WTO). In any given national economy, SMEs sometimes outnumber large companies by a wide margin and also employ many more people. For example, Australian SMEs makeup 98% of all Australian businesses, produce one third of the total GDP (gross domestic product) and employ 4.7 million people. In Chile, in the commercial year 2014, 98.5% of the firms were classified as SMEs. In Tunisia, the self employed workers alone account for about 28% of the total non farm employment, and firms with fewer than 100 employees account for about 62% of total employment. The United States' SMEs generate half of all U. S. jobs, but only 40% of GDP. Developing countries tend to have a larger share of small and medium sized enterprises. Although they create more new jobs than large firms, SMEs also suffer the majority of job destruction/contraction. According to the World Bank Group's 2021 FINDEX database, there is a $1.7 trillion funding gap for formal, women owned micro, small, and medium sized enterprises. Additionally, over 68% of small women owned firms lack access to finance.' Overview
SMEs are important for economic and social reasons, given the sector's role in employment. Due to their sizes, SMEs are heavily influenced by their Chief Executive Officer, a. k. a. CEOs. The CEOs of SMEs are often the founders, owners, and managers of the SMEs. The duties of the CEO in a SME mirror those of the CEO of a large company: the CEO needs to strategically allocate their time, energy, and assets to direct the SMEs. Typically, the CEO is the strategist, champion and leader for developing the SME or the prime reason for the business failing. At the employee level, Petrakis and Kostis (2012) explore the role of interpersonal trust and knowledge in the number of small and medium enterprises. They conclude that knowledge positively affects the number of SMEs, which in turn positively affects interpersonal trust. Note that the empirical results indicate that interpersonal trust does not affect the number of SMEs. Therefore, although knowledge development can reinforce SMEs, trust becomes widespread in a society when the number of SMEs is greater. Legal boundary on SMEs around the world
Multilateral organizations have been criticized for using one measure for all. The legal boundary of SMEs around the world vary, and below is a list of the upper limits of SMEs in some countries. Africa
African small businesses frequently struggle to get the cash they require to thrive. According to the SME Finance Forum, the formal financing gap for African SMEs averaged 17% of GDP across the 43 countries assessed in 2017. According to the World Bank, women own 58% of all MSMEs in Africa. The European Investment Bank's Banking in Africa survey, 2021 suggests that most of the responding banks had a non performing loan (NPL) ratio of at least 5%. NPLs account for at least 10% of the SME portfolio in approximately one third of African banks. Furthermore, 50% of the banks had at least 5% of their SME portfolio under the moratorium, and 40% had at least 5% of SME loans under some type of restructuring. Somalia
In Somalia, the term is SME (for "small, medium, and micro enterprises"); elsewhere in Africa, MSME stands for "micro, small, and medium enterprises". An SME is defined as a small business that has more than 30 employees but less than 250 employees. South Africa
In the National Small Business Amendment Act 2004, micro businesses in the different sectors, varying from the manufacturing to the retail sectors, are defined as businesses with five or fewer employees and a turnover of up to R100,000 ZAR ($6,900). Very small businesses employ between 6 and 20 employees, while small businesses employ between 21 and 50 employees. The upper limit for turnover in a small business varies from R1 million ($69,200) in the agricultural sector to R13 million ($899,800) in the catering, accommodations and other trade sectors as well as in the manufacturing sector, with a maximum of R32 million ($2,214,800) in the wholesale trade sector. Medium sized businesses''' usually employ up to 200 people (100 in the agricultural sector), and the maximum turnover varies from R5 million ($346,100) in the agricultural sector to R51 ($3,529,800) million in the manufacturing sector and R64 ($4,429,600) million in the wholesale trade, commercial agents and allied services sector. A comprehensive definition of an SME in South Africa is, therefore, an enterprise with one or more of the following characteristics:
Fewer than 200 employees,
Annual turnover of less than R64 million,
Capital assets of less than R10 million,
Direct managerial involvement by owners
Asia
SMEs account for nearly 90% of all company entities in developing Asian countries and are the principal private sector employers, supplying 50 80% of all jobs. SMEs cover 97 99% of all firms in South east Asia, contributing considerably to each country's GDP—for example, 46% in Singapore, 57% in Indonesia, and over 40% in other nations. 98% of business establishments in Hong Kong are defined as SMEs and employed 45% of the work force. India
India defines Micro, Small and Medium Enterprises based on dual criteria of investment and turnover. This definition is provided in Section 7 of Micro, Small & Medium Enterprises Development Act, 2006 (MSMED Act) and was notified in September 2006. The Act provides for the classification of enterprises based on their investment size and the nature of the activity undertaken by that enterprise. As per MSMED Act, enterprises are classified into two categories manufacturing enterprises and service enterprises. For each of these categories, a definition is given to explain what constitutes a micro enterprise or a small enterprise or a medium enterprise. If an enterprise does not fall under the above categories, it would be considered a large scale enterprise. In June 2020, India updated the definition as follows:
+Sr NoClassificationCriteria (in ₹)1Micro EnterprisesInvestment <= 1 cr and Turnover <= 5 cr2Small EnterprisesInvestment <= 10 cr and Turnover <= 50 cr3Medium EnterprisesInvestment <= 50 cr and Turnover <= 250 cr
Businesses that are declared as MSMEs and within specific sectors and criteria can then apply for "priority sector" lending to help with business expenses; banks have annual targets set by the Prime Minister's Task Force on MSMEs for year on year increases of lending to various categories of MSMEs. MSME is considered a key contributor to India's growth and contributes 48% to India's total export. Indonesia
In Indonesia, the government defines micro, small, and medium enterprises (Indonesian: usaha mikro kecil menengah, UMKM) based on their assets and revenues according to Law No. 20/2008:
Type Maximum assets, Rp Gross Revenue, Rp Number of Employee Statistics Indonesia Micro maximum 50,000,000 maximum 300,000,000 1 4 Small 50,000,000 500,000,000 300,000,000 2,500,000,000 5 9 Medium 500,000,000 10,000,000,000 2,500,000,000 50,000,000,000 20 99 Large >10,000,000,000 >50,000,000,000 >99
An annual revenue of Rp 50 billion is approximately equal to US$3.1 million as of April 2024. Despite their significant contribution to GDP and job creation, Indonesian MSMEs confront a number of obstacles. One of the most significant is capital access: 60 70 percent of MSMEs lack access to financial institutions and their funding options. Other restrictions include inadequate infrastructure, difficulties acquiring company licences and permissions, high tax rates, political insecurity, and improving their brand image in the digital era. 21st century businesses strategically use both their websites and social media in order to advertise their products and control their branding. Quality content on both information streams will positively affect branding and attract customers. The People's Business Credit (Kredit Usaha Rakyat, or KUR [id]) was established in 2007 by President Yudhoyono to extend credit to businesses that were considered "feasible but not bankable". Bank Rakyat Indonesia conducts more than half of KUR lending nationwide. In Jakarta, the capital city of Indonesia, 529 MSMEs with the potential to be funded have been identified by Bank Indonesia. Economy Sector Number of Companies Processing Industry 151 Health Services and Social Activities 1 Rental leasing services without option rights, employment, travel agents and other business support 9 Professional, Scientific And Technical Services 11 Other Service Activities 21 Arts, Entertainment And Recreation 1 Construction 2 Water Procurement, Waste Management And Recycling, Waste And Garbage Disposal And Cleaning 1 Provision of Accommodation and Provision of Food and Drink 80 Wholesale and retail trade of car and motorcycle repair and maintenance 236 Agriculture, Forestry, and Fisheries 16
Philippines
According to the Department of Trade and Industry's 2020 List of Establishments report, there are 957,620 registered business enterprises operating in the country, composed of 99.51% MSMEs and 0.49% large firms. The MSMEs consist of 88.77% microenterprises, 10.25% small enterprises, and 0.49% medium enterprises. Among the top industry sectors include (1) wholesale and retail trade; repair of motor vehicles and motorcycles (445,386); (2) accommodation and food service activities (134,046); (3) manufacturing (110,916); (4) other service activities (62,376); and (5) financial and insurance activities (45,558) which accounted for about 83.77% of the total number of MSME establishments. Prior to the pandemic, MSMEs generated more than 5.38 million jobs or 62.66% of the country's total employment with a 29.38% share from micro enterprises followed by 25.78% and 7.50% for small and medium enterprises. Europe
European Union
Small companies are important to the European economy as they account for 99.8% of non financial enterprises in the European Union (EU) and employ two thirds of the workforce in the EU. The majority of European firms are small and medium sized enterprises (SMEs), employing over 100 million people. Due to the COVID 19 pandemic, a large majority of SMEs saw a decline in revenue during 2020 2021. Medium sized businesses (or mid caps) play an important role in the European economy, accounting for a considerable part of employment and wealth production. According to a recent European Commission analysis, mid cap companies (250 3000 people) make up about 17% of total employment and 21% of turnover in the EU27 business sector. Micro firms (with fewer than nine employees) employ 38% of the total workforce, while SMEs with fewer than 250 employees account for 34.4%. Larger (XL) firms with 3,000 or more employees account for 10.1% of overall employment in EU business sectors. According to Eurostat SBS statistics, in 2021, tiny enterprises (0 9 workers) and SMEs (excluding micro firms) employed around 30% and 34.5% of the entire workforce in EU27 business sectors, while bigger firms (250+ employees) contributed for 36.4% of overall employment. The pandemic has had a greater impact on SMEs than on large businesses, with an average sales loss of 26% versus 23% for large businesses. Government assistance appears to have benefited SMEs more than large corporations among the companies that do have overdraft facilities, indicating a successful application of policies to ease financial limitations for SMEs even when they receive help from the banking sector. The EIB Group contributed more than €16.35 billion to small and medium sized firms in 2022. SMEs were more quick in altering output during the pandemic, despite the intensity of the shock. In reaction to the crisis, one third of major enterprises altered their output or services, compared to 37% of SMEs. The criteria for defining the size of a business differ from country to country, with many countries having programs of business rate reduction and financial subsidy for SMEs. According to the European Commission, SMEs are enterprises which meet the following definition of staff headcount and either the turnover or balance sheet total definitions:
Company category Staff headcount Turnover Balance sheet total Medium sized < 250 ≤ €50 million ≤ €43 million Small < 50 ≤ €10 million ≤ €10 million Micro < 10 ≤ €2 million ≤ €2 million
In July 2011, the European Commission said it would open a consultation on the definition of SMEs in 2012. A consultation document was issued on 6 February 2018 and the consultation period closed on 6 May 2018. as of November 2019, no conclusions or responses have yet emerged. In Europe, there are three broad parameters that define SMEs:
Micro enterprises have up to 10 employees
Small enterprises have up to 50 employees
Medium sized enterprises have up to 250 employees. The European definition of SME follows: "The category of micro, small and medium sized enterprises (SMEs) is made up of enterprises which employ fewer than 250 persons and which have an annual turnover not exceeding 50 million euro, and/or an annual balance sheet total not exceeding 43 million euro." In order to prepare for an evaluation and revision of some features of the small and medium sized enterprises definition European Union established public consultation period from 6 February 2018 to 6 May 2018. Public consultation is available for all EU member country citizens and organizations. Especially, national and regional authorities, enterprises, business associations or organizations, venture capital providers, research and academic institutions, and individual citizens are expected as the main contributors. EU member states have had individual definitions of what constitutes an SME. For example, the definition in Germany had a limit of 255 employees, while in Belgium it could have been 100. The result is that while a Belgian business of 249 employees would be taxed at full rate in Belgium, it would nevertheless be eligible for SME subsidy under a European labelled programme. SMEs are a crucial element in the supplier network of large enterprises which are already on their way towards Industry 4.0. According to German economist Hans Heinrich Bass, "empirical research on SME as well as policies to promote SME have a long tradition in [West] Germany, dating back into the 19th century. Until the mid 20th century, most researchers considered SME as an impediment to further economic development and SME policies were thus designed in the framework of social policies. Only the Ordoliberalism school, the founding fathers of Germany's social market economy, discovered their strengths, considered SME as a solution to mid 20th century economic problems (mass unemployment, abuse of economic power), and laid the foundations for non selective (functional) industrial policies to promote SMEs." Only around 20% of European SMEs are substantially digitalized, compared to almost 50% of major businesses. Small and medium sized companies make up 56.2% of the non financial sector. Smaller companies account for more than 60% of the value contributed to the non financial sector in Belgium, Italy, and Spain, three of the nations worst hit by the COVID 19 pandemic. An estimated 50% of Europe's small firms may fail because they lack the substantial financial reserves required to weather the crisis. With around 338,000 functioning in Bulgaria in 2022, SMEs and mid caps are major contributors in the Bulgarian economy. They also employ over 75% of the workforce and create 65% of the economy's added value. The results of an EU survey conducted in 2021 suggest that during the pandemic, in countries with larger fiscal packages, SMEs were on average more likely to experience bankruptcy even after controlling for the size of the shock, the use of bank financing, and country and sector fixed effects. When policy assistance rises by 1% of GDP, the probabilities of bankruptcy for a SME are 2.7 times higher than for a non SME. Credit limitations are especially difficult for SMEs and new businesses to overcome. Credit constraints affect 24% of SMEs and 27% of young businesses. Poland
The SME sector in Poland generates almost 50% of the GDP, and out of that, for instance, in 2011, micro companies generated 29.6%, small companies 7.7%, and medium companies 10.4% (big companies 24.0%; other entities 16.5%, and revenues from customs duties and taxes generated 11.9%). In 2011, out of the total of 1,784,603 entities operating in Poland, merely 3,189 were classified as "large", so 1,781,414 were micro, small, or medium. SMEs employed 6.3 million people out of the total of 9.0 million of labour employed in the private sector. In Poland in 2011 there were 36.2 SMEs per 1,000 inhabitants. Nearly seven million people are employed by small businesses in Poland, which accounts for around half of the country's GDP, yet smaller businesses are less likely than larger ones to invest in strategies to combat climate change or boost energy efficiency. In October 2021, the Bank Ochrony rodowiska, a Polish bank that specializes in funding environmental protection initiatives received €75 million from the European Investment Bank (EIB) for these small enterprises. The Polish bank wants to use at least 50% of the loan for initiatives with a clear emphasis on tackling climate change, such improving building energy efficiency or turning to renewable energy sources like solar power. The money is set to be distributed across Poland, with around 80% of it projected to go to cohesive regions. Very small companies are called in the UK micro entities, which have simpler financial reporting requirements. Such micro enterprises must meet any two of the following criteria: balance sheet £316,000 or less; turnover £632,000 or less; employees 10 or less. Many small and medium sized businesses form part of the UK's currently growing Mittelstand, or Brittelstand'' as it is also sometimes named. These are businesses in Britain that are not only small or medium but also have a much broader set of values and more elastic definition. The Department for Business Innovation and Skills estimated that at the start of 2014, 99.3% of UK private sector businesses were SMEs, with their £1.6 trillion annual turnover accounting for 47% of private sector turnover. In order to support SMEs, the UK government set a target in 2010 "that 25% of government’s spend, either directly or in supply chains, goes to SMEs by 2015"; it achieved this by 2013.
Small and medium sized enterprises (SMEs) or small and medium sized businesses (SMBs) are businesses whose personnel and revenue numbers fall below certain limits. The abbreviation "SME" is used by international organizations such as the World Bank, the OECD, European Union, the United Nations, and the World Trade Organization (WTO). In any given national economy, SMEs sometimes outnumber large companies by a wide margin and also employ many more people. For example, Australian SMEs makeup 98% of all Australian businesses, produce one third of the total GDP (gross domestic product) and employ 4.7 million people. In Chile, in the commercial year 2014, 98.5% of the firms were classified as SMEs. In Tunisia, the self employed workers alone account for about 28% of the total non farm employment, and firms with fewer than 100 employees account for about 62% of total employment. The United States' SMEs generate half of all U. S. jobs, but only 40% of GDP. Developing countries tend to have a larger share of small and medium sized enterprises. Although they create more new jobs than large firms, SMEs also suffer the majority of job destruction/contraction. According to the World Bank Group's 2021 FINDEX database, there is a $1.7 trillion funding gap for formal, women owned micro, small, and medium sized enterprises. Additionally, over 68% of small women owned firms lack access to finance.' Overview
SMEs are important for economic and social reasons, given the sector's role in employment. Due to their sizes, SMEs are heavily influenced by their Chief Executive Officer, a. k. a. CEOs. The CEOs of SMEs are often the founders, owners, and managers of the SMEs. The duties of the CEO in a SME mirror those of the CEO of a large company: the CEO needs to strategically allocate their time, energy, and assets to direct the SMEs. Typically, the CEO is the strategist, champion and leader for developing the SME or the prime reason for the business failing. At the employee level, Petrakis and Kostis (2012) explore the role of interpersonal trust and knowledge in the number of small and medium enterprises. They conclude that knowledge positively affects the number of SMEs, which in turn positively affects interpersonal trust. Note that the empirical results indicate that interpersonal trust does not affect the number of SMEs. Therefore, although knowledge development can reinforce SMEs, trust becomes widespread in a society when the number of SMEs is greater. Legal boundary on SMEs around the world
Multilateral organizations have been criticized for using one measure for all. The legal boundary of SMEs around the world vary, and below is a list of the upper limits of SMEs in some countries. Africa
African small businesses frequently struggle to get the cash they require to thrive. According to the SME Finance Forum, the formal financing gap for African SMEs averaged 17% of GDP across the 43 countries assessed in 2017. According to the World Bank, women own 58% of all MSMEs in Africa. The European Investment Bank's Banking in Africa survey, 2021 suggests that most of the responding banks had a non performing loan (NPL) ratio of at least 5%. NPLs account for at least 10% of the SME portfolio in approximately one third of African banks. Furthermore, 50% of the banks had at least 5% of their SME portfolio under the moratorium, and 40% had at least 5% of SME loans under some type of restructuring. Somalia
In Somalia, the term is SME (for "small, medium, and micro enterprises"); elsewhere in Africa, MSME stands for "micro, small, and medium enterprises". An SME is defined as a small business that has more than 30 employees but less than 250 employees. South Africa
In the National Small Business Amendment Act 2004, micro businesses in the different sectors, varying from the manufacturing to the retail sectors, are defined as businesses with five or fewer employees and a turnover of up to R100,000 ZAR ($6,900). Very small businesses employ between 6 and 20 employees, while small businesses employ between 21 and 50 employees. The upper limit for turnover in a small business varies from R1 million ($69,200) in the agricultural sector to R13 million ($899,800) in the catering, accommodations and other trade sectors as well as in the manufacturing sector, with a maximum of R32 million ($2,214,800) in the wholesale trade sector. Medium sized businesses''' usually employ up to 200 people (100 in the agricultural sector), and the maximum turnover varies from R5 million ($346,100) in the agricultural sector to R51 ($3,529,800) million in the manufacturing sector and R64 ($4,429,600) million in the wholesale trade, commercial agents and allied services sector. A comprehensive definition of an SME in South Africa is, therefore, an enterprise with one or more of the following characteristics:
Fewer than 200 employees,
Annual turnover of less than R64 million,
Capital assets of less than R10 million,
Direct managerial involvement by owners
Asia
SMEs account for nearly 90% of all company entities in developing Asian countries and are the principal private sector employers, supplying 50 80% of all jobs. SMEs cover 97 99% of all firms in South east Asia, contributing considerably to each country's GDP—for example, 46% in Singapore, 57% in Indonesia, and over 40% in other nations. 98% of business establishments in Hong Kong are defined as SMEs and employed 45% of the work force. India
India defines Micro, Small and Medium Enterprises based on dual criteria of investment and turnover. This definition is provided in Section 7 of Micro, Small & Medium Enterprises Development Act, 2006 (MSMED Act) and was notified in September 2006. The Act provides for the classification of enterprises based on their investment size and the nature of the activity undertaken by that enterprise. As per MSMED Act, enterprises are classified into two categories manufacturing enterprises and service enterprises. For each of these categories, a definition is given to explain what constitutes a micro enterprise or a small enterprise or a medium enterprise. If an enterprise does not fall under the above categories, it would be considered a large scale enterprise. In June 2020, India updated the definition as follows:
+Sr NoClassificationCriteria (in ₹)1Micro EnterprisesInvestment <= 1 cr and Turnover <= 5 cr2Small EnterprisesInvestment <= 10 cr and Turnover <= 50 cr3Medium EnterprisesInvestment <= 50 cr and Turnover <= 250 cr
Businesses that are declared as MSMEs and within specific sectors and criteria can then apply for "priority sector" lending to help with business expenses; banks have annual targets set by the Prime Minister's Task Force on MSMEs for year on year increases of lending to various categories of MSMEs. MSME is considered a key contributor to India's growth and contributes 48% to India's total export. Indonesia
In Indonesia, the government defines micro, small, and medium enterprises (Indonesian: usaha mikro kecil menengah, UMKM) based on their assets and revenues according to Law No. 20/2008:
Type Maximum assets, Rp Gross Revenue, Rp Number of Employee Statistics Indonesia Micro maximum 50,000,000 maximum 300,000,000 1 4 Small 50,000,000 500,000,000 300,000,000 2,500,000,000 5 9 Medium 500,000,000 10,000,000,000 2,500,000,000 50,000,000,000 20 99 Large >10,000,000,000 >50,000,000,000 >99
An annual revenue of Rp 50 billion is approximately equal to US$3.1 million as of April 2024. Despite their significant contribution to GDP and job creation, Indonesian MSMEs confront a number of obstacles. One of the most significant is capital access: 60 70 percent of MSMEs lack access to financial institutions and their funding options. Other restrictions include inadequate infrastructure, difficulties acquiring company licences and permissions, high tax rates, political insecurity, and improving their brand image in the digital era. 21st century businesses strategically use both their websites and social media in order to advertise their products and control their branding. Quality content on both information streams will positively affect branding and attract customers. The People's Business Credit (Kredit Usaha Rakyat, or KUR [id]) was established in 2007 by President Yudhoyono to extend credit to businesses that were considered "feasible but not bankable". Bank Rakyat Indonesia conducts more than half of KUR lending nationwide. In Jakarta, the capital city of Indonesia, 529 MSMEs with the potential to be funded have been identified by Bank Indonesia. Economy Sector Number of Companies Processing Industry 151 Health Services and Social Activities 1 Rental leasing services without option rights, employment, travel agents and other business support 9 Professional, Scientific And Technical Services 11 Other Service Activities 21 Arts, Entertainment And Recreation 1 Construction 2 Water Procurement, Waste Management And Recycling, Waste And Garbage Disposal And Cleaning 1 Provision of Accommodation and Provision of Food and Drink 80 Wholesale and retail trade of car and motorcycle repair and maintenance 236 Agriculture, Forestry, and Fisheries 16
Philippines
According to the Department of Trade and Industry's 2020 List of Establishments report, there are 957,620 registered business enterprises operating in the country, composed of 99.51% MSMEs and 0.49% large firms. The MSMEs consist of 88.77% microenterprises, 10.25% small enterprises, and 0.49% medium enterprises. Among the top industry sectors include (1) wholesale and retail trade; repair of motor vehicles and motorcycles (445,386); (2) accommodation and food service activities (134,046); (3) manufacturing (110,916); (4) other service activities (62,376); and (5) financial and insurance activities (45,558) which accounted for about 83.77% of the total number of MSME establishments. Prior to the pandemic, MSMEs generated more than 5.38 million jobs or 62.66% of the country's total employment with a 29.38% share from micro enterprises followed by 25.78% and 7.50% for small and medium enterprises. Europe
European Union
Small companies are important to the European economy as they account for 99.8% of non financial enterprises in the European Union (EU) and employ two thirds of the workforce in the EU. The majority of European firms are small and medium sized enterprises (SMEs), employing over 100 million people. Due to the COVID 19 pandemic, a large majority of SMEs saw a decline in revenue during 2020 2021. Medium sized businesses (or mid caps) play an important role in the European economy, accounting for a considerable part of employment and wealth production. According to a recent European Commission analysis, mid cap companies (250 3000 people) make up about 17% of total employment and 21% of turnover in the EU27 business sector. Micro firms (with fewer than nine employees) employ 38% of the total workforce, while SMEs with fewer than 250 employees account for 34.4%. Larger (XL) firms with 3,000 or more employees account for 10.1% of overall employment in EU business sectors. According to Eurostat SBS statistics, in 2021, tiny enterprises (0 9 workers) and SMEs (excluding micro firms) employed around 30% and 34.5% of the entire workforce in EU27 business sectors, while bigger firms (250+ employees) contributed for 36.4% of overall employment. The pandemic has had a greater impact on SMEs than on large businesses, with an average sales loss of 26% versus 23% for large businesses. Government assistance appears to have benefited SMEs more than large corporations among the companies that do have overdraft facilities, indicating a successful application of policies to ease financial limitations for SMEs even when they receive help from the banking sector. The EIB Group contributed more than €16.35 billion to small and medium sized firms in 2022. SMEs were more quick in altering output during the pandemic, despite the intensity of the shock. In reaction to the crisis, one third of major enterprises altered their output or services, compared to 37% of SMEs. The criteria for defining the size of a business differ from country to country, with many countries having programs of business rate reduction and financial subsidy for SMEs. According to the European Commission, SMEs are enterprises which meet the following definition of staff headcount and either the turnover or balance sheet total definitions:
Company category Staff headcount Turnover Balance sheet total Medium sized < 250 ≤ €50 million ≤ €43 million Small < 50 ≤ €10 million ≤ €10 million Micro < 10 ≤ €2 million ≤ €2 million
In July 2011, the European Commission said it would open a consultation on the definition of SMEs in 2012. A consultation document was issued on 6 February 2018 and the consultation period closed on 6 May 2018. as of November 2019, no conclusions or responses have yet emerged. In Europe, there are three broad parameters that define SMEs:
Micro enterprises have up to 10 employees
Small enterprises have up to 50 employees
Medium sized enterprises have up to 250 employees. The European definition of SME follows: "The category of micro, small and medium sized enterprises (SMEs) is made up of enterprises which employ fewer than 250 persons and which have an annual turnover not exceeding 50 million euro, and/or an annual balance sheet total not exceeding 43 million euro." In order to prepare for an evaluation and revision of some features of the small and medium sized enterprises definition European Union established public consultation period from 6 February 2018 to 6 May 2018. Public consultation is available for all EU member country citizens and organizations. Especially, national and regional authorities, enterprises, business associations or organizations, venture capital providers, research and academic institutions, and individual citizens are expected as the main contributors. EU member states have had individual definitions of what constitutes an SME. For example, the definition in Germany had a limit of 255 employees, while in Belgium it could have been 100. The result is that while a Belgian business of 249 employees would be taxed at full rate in Belgium, it would nevertheless be eligible for SME subsidy under a European labelled programme. SMEs are a crucial element in the supplier network of large enterprises which are already on their way towards Industry 4.0. According to German economist Hans Heinrich Bass, "empirical research on SME as well as policies to promote SME have a long tradition in [West] Germany, dating back into the 19th century. Until the mid 20th century, most researchers considered SME as an impediment to further economic development and SME policies were thus designed in the framework of social policies. Only the Ordoliberalism school, the founding fathers of Germany's social market economy, discovered their strengths, considered SME as a solution to mid 20th century economic problems (mass unemployment, abuse of economic power), and laid the foundations for non selective (functional) industrial policies to promote SMEs." Only around 20% of European SMEs are substantially digitalized, compared to almost 50% of major businesses. Small and medium sized companies make up 56.2% of the non financial sector. Smaller companies account for more than 60% of the value contributed to the non financial sector in Belgium, Italy, and Spain, three of the nations worst hit by the COVID 19 pandemic. An estimated 50% of Europe's small firms may fail because they lack the substantial financial reserves required to weather the crisis. With around 338,000 functioning in Bulgaria in 2022, SMEs and mid caps are major contributors in the Bulgarian economy. They also employ over 75% of the workforce and create 65% of the economy's added value. The results of an EU survey conducted in 2021 suggest that during the pandemic, in countries with larger fiscal packages, SMEs were on average more likely to experience bankruptcy even after controlling for the size of the shock, the use of bank financing, and country and sector fixed effects. When policy assistance rises by 1% of GDP, the probabilities of bankruptcy for a SME are 2.7 times higher than for a non SME. Credit limitations are especially difficult for SMEs and new businesses to overcome. Credit constraints affect 24% of SMEs and 27% of young businesses. Poland
The SME sector in Poland generates almost 50% of the GDP, and out of that, for instance, in 2011, micro companies generated 29.6%, small companies 7.7%, and medium companies 10.4% (big companies 24.0%; other entities 16.5%, and revenues from customs duties and taxes generated 11.9%). In 2011, out of the total of 1,784,603 entities operating in Poland, merely 3,189 were classified as "large", so 1,781,414 were micro, small, or medium. SMEs employed 6.3 million people out of the total of 9.0 million of labour employed in the private sector. In Poland in 2011 there were 36.2 SMEs per 1,000 inhabitants. Nearly seven million people are employed by small businesses in Poland, which accounts for around half of the country's GDP, yet smaller businesses are less likely than larger ones to invest in strategies to combat climate change or boost energy efficiency. In October 2021, the Bank Ochrony rodowiska, a Polish bank that specializes in funding environmental protection initiatives received €75 million from the European Investment Bank (EIB) for these small enterprises. The Polish bank wants to use at least 50% of the loan for initiatives with a clear emphasis on tackling climate change, such improving building energy efficiency or turning to renewable energy sources like solar power. The money is set to be distributed across Poland, with around 80% of it projected to go to cohesive regions. Very small companies are called in the UK micro entities, which have simpler financial reporting requirements. Such micro enterprises must meet any two of the following criteria: balance sheet £316,000 or less; turnover £632,000 or less; employees 10 or less. Many small and medium sized businesses form part of the UK's currently growing Mittelstand, or Brittelstand'' as it is also sometimes named. These are businesses in Britain that are not only small or medium but also have a much broader set of values and more elastic definition. The Department for Business Innovation and Skills estimated that at the start of 2014, 99.3% of UK private sector businesses were SMEs, with their £1.6 trillion annual turnover accounting for 47% of private sector turnover. In order to support SMEs, the UK government set a target in 2010 "that 25% of government’s spend, either directly or in supply chains, goes to SMEs by 2015"; it achieved this by 2013.
Индонезия. В Индонезии правительство определяет микро-, малые и средние предприятия (индон. usaha mikro kecil menengah, UMKM) на основе их активов и доходов в соответствии с Законом № 20/2008:
Type of business with small personnel numbers
Small and medium sized enterprises (SMEs) or small and medium sized businesses (SMBs) are businesses whose personnel and revenue numbers fall below certain limits. The abbreviation "SME" is used by international organizations such as the World Bank, the OECD, European Union, the United Nations, and the World Trade Organization (WTO). In any given national economy, SMEs sometimes outnumber large companies by a wide margin and also employ many more people. For example, Australian SMEs makeup 98% of all Australian businesses, produce one third of the total GDP (gross domestic product) and employ 4.7 million people. In Chile, in the commercial year 2014, 98.5% of the firms were classified as SMEs. In Tunisia, the self employed workers alone account for about 28% of the total non farm employment, and firms with fewer than 100 employees account for about 62% of total employment. The United States' SMEs generate half of all U. S. jobs, but only 40% of GDP. Developing countries tend to have a larger share of small and medium sized enterprises. Although they create more new jobs than large firms, SMEs also suffer the majority of job destruction/contraction. According to the World Bank Group's 2021 FINDEX database, there is a $1.7 trillion funding gap for formal, women owned micro, small, and medium sized enterprises. Additionally, over 68% of small women owned firms lack access to finance.' Overview
SMEs are important for economic and social reasons, given the sector's role in employment. Due to their sizes, SMEs are heavily influenced by their Chief Executive Officer, a. k. a. CEOs. The CEOs of SMEs are often the founders, owners, and managers of the SMEs. The duties of the CEO in a SME mirror those of the CEO of a large company: the CEO needs to strategically allocate their time, energy, and assets to direct the SMEs. Typically, the CEO is the strategist, champion and leader for developing the SME or the prime reason for the business failing. At the employee level, Petrakis and Kostis (2012) explore the role of interpersonal trust and knowledge in the number of small and medium enterprises. They conclude that knowledge positively affects the number of SMEs, which in turn positively affects interpersonal trust. Note that the empirical results indicate that interpersonal trust does not affect the number of SMEs. Therefore, although knowledge development can reinforce SMEs, trust becomes widespread in a society when the number of SMEs is greater. Legal boundary on SMEs around the world
Multilateral organizations have been criticized for using one measure for all. The legal boundary of SMEs around the world vary, and below is a list of the upper limits of SMEs in some countries. Africa
African small businesses frequently struggle to get the cash they require to thrive. According to the SME Finance Forum, the formal financing gap for African SMEs averaged 17% of GDP across the 43 countries assessed in 2017. According to the World Bank, women own 58% of all MSMEs in Africa. The European Investment Bank's Banking in Africa survey, 2021 suggests that most of the responding banks had a non performing loan (NPL) ratio of at least 5%. NPLs account for at least 10% of the SME portfolio in approximately one third of African banks. Furthermore, 50% of the banks had at least 5% of their SME portfolio under the moratorium, and 40% had at least 5% of SME loans under some type of restructuring. Somalia
In Somalia, the term is SME (for "small, medium, and micro enterprises"); elsewhere in Africa, MSME stands for "micro, small, and medium enterprises". An SME is defined as a small business that has more than 30 employees but less than 250 employees. South Africa
In the National Small Business Amendment Act 2004, micro businesses in the different sectors, varying from the manufacturing to the retail sectors, are defined as businesses with five or fewer employees and a turnover of up to R100,000 ZAR ($6,900). Very small businesses employ between 6 and 20 employees, while small businesses employ between 21 and 50 employees. The upper limit for turnover in a small business varies from R1 million ($69,200) in the agricultural sector to R13 million ($899,800) in the catering, accommodations and other trade sectors as well as in the manufacturing sector, with a maximum of R32 million ($2,214,800) in the wholesale trade sector. Medium sized businesses''' usually employ up to 200 people (100 in the agricultural sector), and the maximum turnover varies from R5 million ($346,100) in the agricultural sector to R51 ($3,529,800) million in the manufacturing sector and R64 ($4,429,600) million in the wholesale trade, commercial agents and allied services sector. A comprehensive definition of an SME in South Africa is, therefore, an enterprise with one or more of the following characteristics:
Fewer than 200 employees,
Annual turnover of less than R64 million,
Capital assets of less than R10 million,
Direct managerial involvement by owners
Asia
SMEs account for nearly 90% of all company entities in developing Asian countries and are the principal private sector employers, supplying 50 80% of all jobs. SMEs cover 97 99% of all firms in South east Asia, contributing considerably to each country's GDP—for example, 46% in Singapore, 57% in Indonesia, and over 40% in other nations. 98% of business establishments in Hong Kong are defined as SMEs and employed 45% of the work force. India
India defines Micro, Small and Medium Enterprises based on dual criteria of investment and turnover. This definition is provided in Section 7 of Micro, Small & Medium Enterprises Development Act, 2006 (MSMED Act) and was notified in September 2006. The Act provides for the classification of enterprises based on their investment size and the nature of the activity undertaken by that enterprise. As per MSMED Act, enterprises are classified into two categories manufacturing enterprises and service enterprises. For each of these categories, a definition is given to explain what constitutes a micro enterprise or a small enterprise or a medium enterprise. If an enterprise does not fall under the above categories, it would be considered a large scale enterprise. In June 2020, India updated the definition as follows:
+Sr NoClassificationCriteria (in ₹)1Micro EnterprisesInvestment <= 1 cr and Turnover <= 5 cr2Small EnterprisesInvestment <= 10 cr and Turnover <= 50 cr3Medium EnterprisesInvestment <= 50 cr and Turnover <= 250 cr
Businesses that are declared as MSMEs and within specific sectors and criteria can then apply for "priority sector" lending to help with business expenses; banks have annual targets set by the Prime Minister's Task Force on MSMEs for year on year increases of lending to various categories of MSMEs. MSME is considered a key contributor to India's growth and contributes 48% to India's total export. Indonesia
In Indonesia, the government defines micro, small, and medium enterprises (Indonesian: usaha mikro kecil menengah, UMKM) based on their assets and revenues according to Law No. 20/2008:
Type Maximum assets, Rp Gross Revenue, Rp Number of Employee Statistics Indonesia Micro maximum 50,000,000 maximum 300,000,000 1 4 Small 50,000,000 500,000,000 300,000,000 2,500,000,000 5 9 Medium 500,000,000 10,000,000,000 2,500,000,000 50,000,000,000 20 99 Large >10,000,000,000 >50,000,000,000 >99
An annual revenue of Rp 50 billion is approximately equal to US$3.1 million as of April 2024. Despite their significant contribution to GDP and job creation, Indonesian MSMEs confront a number of obstacles. One of the most significant is capital access: 60 70 percent of MSMEs lack access to financial institutions and their funding options. Other restrictions include inadequate infrastructure, difficulties acquiring company licences and permissions, high tax rates, political insecurity, and improving their brand image in the digital era. 21st century businesses strategically use both their websites and social media in order to advertise their products and control their branding. Quality content on both information streams will positively affect branding and attract customers. The People's Business Credit (Kredit Usaha Rakyat, or KUR [id]) was established in 2007 by President Yudhoyono to extend credit to businesses that were considered "feasible but not bankable". Bank Rakyat Indonesia conducts more than half of KUR lending nationwide. In Jakarta, the capital city of Indonesia, 529 MSMEs with the potential to be funded have been identified by Bank Indonesia. Economy Sector Number of Companies Processing Industry 151 Health Services and Social Activities 1 Rental leasing services without option rights, employment, travel agents and other business support 9 Professional, Scientific And Technical Services 11 Other Service Activities 21 Arts, Entertainment And Recreation 1 Construction 2 Water Procurement, Waste Management And Recycling, Waste And Garbage Disposal And Cleaning 1 Provision of Accommodation and Provision of Food and Drink 80 Wholesale and retail trade of car and motorcycle repair and maintenance 236 Agriculture, Forestry, and Fisheries 16
Philippines
According to the Department of Trade and Industry's 2020 List of Establishments report, there are 957,620 registered business enterprises operating in the country, composed of 99.51% MSMEs and 0.49% large firms. The MSMEs consist of 88.77% microenterprises, 10.25% small enterprises, and 0.49% medium enterprises. Among the top industry sectors include (1) wholesale and retail trade; repair of motor vehicles and motorcycles (445,386); (2) accommodation and food service activities (134,046); (3) manufacturing (110,916); (4) other service activities (62,376); and (5) financial and insurance activities (45,558) which accounted for about 83.77% of the total number of MSME establishments. Prior to the pandemic, MSMEs generated more than 5.38 million jobs or 62.66% of the country's total employment with a 29.38% share from micro enterprises followed by 25.78% and 7.50% for small and medium enterprises. Europe
European Union
Small companies are important to the European economy as they account for 99.8% of non financial enterprises in the European Union (EU) and employ two thirds of the workforce in the EU. The majority of European firms are small and medium sized enterprises (SMEs), employing over 100 million people. Due to the COVID 19 pandemic, a large majority of SMEs saw a decline in revenue during 2020 2021. Medium sized businesses (or mid caps) play an important role in the European economy, accounting for a considerable part of employment and wealth production. According to a recent European Commission analysis, mid cap companies (250 3000 people) make up about 17% of total employment and 21% of turnover in the EU27 business sector. Micro firms (with fewer than nine employees) employ 38% of the total workforce, while SMEs with fewer than 250 employees account for 34.4%. Larger (XL) firms with 3,000 or more employees account for 10.1% of overall employment in EU business sectors. According to Eurostat SBS statistics, in 2021, tiny enterprises (0 9 workers) and SMEs (excluding micro firms) employed around 30% and 34.5% of the entire workforce in EU27 business sectors, while bigger firms (250+ employees) contributed for 36.4% of overall employment. The pandemic has had a greater impact on SMEs than on large businesses, with an average sales loss of 26% versus 23% for large businesses. Government assistance appears to have benefited SMEs more than large corporations among the companies that do have overdraft facilities, indicating a successful application of policies to ease financial limitations for SMEs even when they receive help from the banking sector. The EIB Group contributed more than €16.35 billion to small and medium sized firms in 2022. SMEs were more quick in altering output during the pandemic, despite the intensity of the shock. In reaction to the crisis, one third of major enterprises altered their output or services, compared to 37% of SMEs. The criteria for defining the size of a business differ from country to country, with many countries having programs of business rate reduction and financial subsidy for SMEs. According to the European Commission, SMEs are enterprises which meet the following definition of staff headcount and either the turnover or balance sheet total definitions:
Company category Staff headcount Turnover Balance sheet total Medium sized < 250 ≤ €50 million ≤ €43 million Small < 50 ≤ €10 million ≤ €10 million Micro < 10 ≤ €2 million ≤ €2 million
In July 2011, the European Commission said it would open a consultation on the definition of SMEs in 2012. A consultation document was issued on 6 February 2018 and the consultation period closed on 6 May 2018. as of November 2019, no conclusions or responses have yet emerged. In Europe, there are three broad parameters that define SMEs:
Micro enterprises have up to 10 employees
Small enterprises have up to 50 employees
Medium sized enterprises have up to 250 employees. The European definition of SME follows: "The category of micro, small and medium sized enterprises (SMEs) is made up of enterprises which employ fewer than 250 persons and which have an annual turnover not exceeding 50 million euro, and/or an annual balance sheet total not exceeding 43 million euro." In order to prepare for an evaluation and revision of some features of the small and medium sized enterprises definition European Union established public consultation period from 6 February 2018 to 6 May 2018. Public consultation is available for all EU member country citizens and organizations. Especially, national and regional authorities, enterprises, business associations or organizations, venture capital providers, research and academic institutions, and individual citizens are expected as the main contributors. EU member states have had individual definitions of what constitutes an SME. For example, the definition in Germany had a limit of 255 employees, while in Belgium it could have been 100. The result is that while a Belgian business of 249 employees would be taxed at full rate in Belgium, it would nevertheless be eligible for SME subsidy under a European labelled programme. SMEs are a crucial element in the supplier network of large enterprises which are already on their way towards Industry 4.0. According to German economist Hans Heinrich Bass, "empirical research on SME as well as policies to promote SME have a long tradition in [West] Germany, dating back into the 19th century. Until the mid 20th century, most researchers considered SME as an impediment to further economic development and SME policies were thus designed in the framework of social policies. Only the Ordoliberalism school, the founding fathers of Germany's social market economy, discovered their strengths, considered SME as a solution to mid 20th century economic problems (mass unemployment, abuse of economic power), and laid the foundations for non selective (functional) industrial policies to promote SMEs." Only around 20% of European SMEs are substantially digitalized, compared to almost 50% of major businesses. Small and medium sized companies make up 56.2% of the non financial sector. Smaller companies account for more than 60% of the value contributed to the non financial sector in Belgium, Italy, and Spain, three of the nations worst hit by the COVID 19 pandemic. An estimated 50% of Europe's small firms may fail because they lack the substantial financial reserves required to weather the crisis. With around 338,000 functioning in Bulgaria in 2022, SMEs and mid caps are major contributors in the Bulgarian economy. They also employ over 75% of the workforce and create 65% of the economy's added value. The results of an EU survey conducted in 2021 suggest that during the pandemic, in countries with larger fiscal packages, SMEs were on average more likely to experience bankruptcy even after controlling for the size of the shock, the use of bank financing, and country and sector fixed effects. When policy assistance rises by 1% of GDP, the probabilities of bankruptcy for a SME are 2.7 times higher than for a non SME. Credit limitations are especially difficult for SMEs and new businesses to overcome. Credit constraints affect 24% of SMEs and 27% of young businesses. Poland
The SME sector in Poland generates almost 50% of the GDP, and out of that, for instance, in 2011, micro companies generated 29.6%, small companies 7.7%, and medium companies 10.4% (big companies 24.0%; other entities 16.5%, and revenues from customs duties and taxes generated 11.9%). In 2011, out of the total of 1,784,603 entities operating in Poland, merely 3,189 were classified as "large", so 1,781,414 were micro, small, or medium. SMEs employed 6.3 million people out of the total of 9.0 million of labour employed in the private sector. In Poland in 2011 there were 36.2 SMEs per 1,000 inhabitants. Nearly seven million people are employed by small businesses in Poland, which accounts for around half of the country's GDP, yet smaller businesses are less likely than larger ones to invest in strategies to combat climate change or boost energy efficiency. In October 2021, the Bank Ochrony rodowiska, a Polish bank that specializes in funding environmental protection initiatives received €75 million from the European Investment Bank (EIB) for these small enterprises. The Polish bank wants to use at least 50% of the loan for initiatives with a clear emphasis on tackling climate change, such improving building energy efficiency or turning to renewable energy sources like solar power. The money is set to be distributed across Poland, with around 80% of it projected to go to cohesive regions. Very small companies are called in the UK micro entities, which have simpler financial reporting requirements. Such micro enterprises must meet any two of the following criteria: balance sheet £316,000 or less; turnover £632,000 or less; employees 10 or less. Many small and medium sized businesses form part of the UK's currently growing Mittelstand, or Brittelstand'' as it is also sometimes named. These are businesses in Britain that are not only small or medium but also have a much broader set of values and more elastic definition. The Department for Business Innovation and Skills estimated that at the start of 2014, 99.3% of UK private sector businesses were SMEs, with their £1.6 trillion annual turnover accounting for 47% of private sector turnover. In order to support SMEs, the UK government set a target in 2010 "that 25% of government’s spend, either directly or in supply chains, goes to SMEs by 2015"; it achieved this by 2013.
Small and medium sized enterprises (SMEs) or small and medium sized businesses (SMBs) are businesses whose personnel and revenue numbers fall below certain limits. The abbreviation "SME" is used by international organizations such as the World Bank, the OECD, European Union, the United Nations, and the World Trade Organization (WTO). In any given national economy, SMEs sometimes outnumber large companies by a wide margin and also employ many more people. For example, Australian SMEs makeup 98% of all Australian businesses, produce one third of the total GDP (gross domestic product) and employ 4.7 million people. In Chile, in the commercial year 2014, 98.5% of the firms were classified as SMEs. In Tunisia, the self employed workers alone account for about 28% of the total non farm employment, and firms with fewer than 100 employees account for about 62% of total employment. The United States' SMEs generate half of all U. S. jobs, but only 40% of GDP. Developing countries tend to have a larger share of small and medium sized enterprises. Although they create more new jobs than large firms, SMEs also suffer the majority of job destruction/contraction. According to the World Bank Group's 2021 FINDEX database, there is a $1.7 trillion funding gap for formal, women owned micro, small, and medium sized enterprises. Additionally, over 68% of small women owned firms lack access to finance.' Overview
SMEs are important for economic and social reasons, given the sector's role in employment. Due to their sizes, SMEs are heavily influenced by their Chief Executive Officer, a. k. a. CEOs. The CEOs of SMEs are often the founders, owners, and managers of the SMEs. The duties of the CEO in a SME mirror those of the CEO of a large company: the CEO needs to strategically allocate their time, energy, and assets to direct the SMEs. Typically, the CEO is the strategist, champion and leader for developing the SME or the prime reason for the business failing. At the employee level, Petrakis and Kostis (2012) explore the role of interpersonal trust and knowledge in the number of small and medium enterprises. They conclude that knowledge positively affects the number of SMEs, which in turn positively affects interpersonal trust. Note that the empirical results indicate that interpersonal trust does not affect the number of SMEs. Therefore, although knowledge development can reinforce SMEs, trust becomes widespread in a society when the number of SMEs is greater. Legal boundary on SMEs around the world
Multilateral organizations have been criticized for using one measure for all. The legal boundary of SMEs around the world vary, and below is a list of the upper limits of SMEs in some countries. Africa
African small businesses frequently struggle to get the cash they require to thrive. According to the SME Finance Forum, the formal financing gap for African SMEs averaged 17% of GDP across the 43 countries assessed in 2017. According to the World Bank, women own 58% of all MSMEs in Africa. The European Investment Bank's Banking in Africa survey, 2021 suggests that most of the responding banks had a non performing loan (NPL) ratio of at least 5%. NPLs account for at least 10% of the SME portfolio in approximately one third of African banks. Furthermore, 50% of the banks had at least 5% of their SME portfolio under the moratorium, and 40% had at least 5% of SME loans under some type of restructuring. Somalia
In Somalia, the term is SME (for "small, medium, and micro enterprises"); elsewhere in Africa, MSME stands for "micro, small, and medium enterprises". An SME is defined as a small business that has more than 30 employees but less than 250 employees. South Africa
In the National Small Business Amendment Act 2004, micro businesses in the different sectors, varying from the manufacturing to the retail sectors, are defined as businesses with five or fewer employees and a turnover of up to R100,000 ZAR ($6,900). Very small businesses employ between 6 and 20 employees, while small businesses employ between 21 and 50 employees. The upper limit for turnover in a small business varies from R1 million ($69,200) in the agricultural sector to R13 million ($899,800) in the catering, accommodations and other trade sectors as well as in the manufacturing sector, with a maximum of R32 million ($2,214,800) in the wholesale trade sector. Medium sized businesses''' usually employ up to 200 people (100 in the agricultural sector), and the maximum turnover varies from R5 million ($346,100) in the agricultural sector to R51 ($3,529,800) million in the manufacturing sector and R64 ($4,429,600) million in the wholesale trade, commercial agents and allied services sector. A comprehensive definition of an SME in South Africa is, therefore, an enterprise with one or more of the following characteristics:
Fewer than 200 employees,
Annual turnover of less than R64 million,
Capital assets of less than R10 million,
Direct managerial involvement by owners
Asia
SMEs account for nearly 90% of all company entities in developing Asian countries and are the principal private sector employers, supplying 50 80% of all jobs. SMEs cover 97 99% of all firms in South east Asia, contributing considerably to each country's GDP—for example, 46% in Singapore, 57% in Indonesia, and over 40% in other nations. 98% of business establishments in Hong Kong are defined as SMEs and employed 45% of the work force. India
India defines Micro, Small and Medium Enterprises based on dual criteria of investment and turnover. This definition is provided in Section 7 of Micro, Small & Medium Enterprises Development Act, 2006 (MSMED Act) and was notified in September 2006. The Act provides for the classification of enterprises based on their investment size and the nature of the activity undertaken by that enterprise. As per MSMED Act, enterprises are classified into two categories manufacturing enterprises and service enterprises. For each of these categories, a definition is given to explain what constitutes a micro enterprise or a small enterprise or a medium enterprise. If an enterprise does not fall under the above categories, it would be considered a large scale enterprise. In June 2020, India updated the definition as follows:
+Sr NoClassificationCriteria (in ₹)1Micro EnterprisesInvestment <= 1 cr and Turnover <= 5 cr2Small EnterprisesInvestment <= 10 cr and Turnover <= 50 cr3Medium EnterprisesInvestment <= 50 cr and Turnover <= 250 cr
Businesses that are declared as MSMEs and within specific sectors and criteria can then apply for "priority sector" lending to help with business expenses; banks have annual targets set by the Prime Minister's Task Force on MSMEs for year on year increases of lending to various categories of MSMEs. MSME is considered a key contributor to India's growth and contributes 48% to India's total export. Indonesia
In Indonesia, the government defines micro, small, and medium enterprises (Indonesian: usaha mikro kecil menengah, UMKM) based on their assets and revenues according to Law No. 20/2008:
Type Maximum assets, Rp Gross Revenue, Rp Number of Employee Statistics Indonesia Micro maximum 50,000,000 maximum 300,000,000 1 4 Small 50,000,000 500,000,000 300,000,000 2,500,000,000 5 9 Medium 500,000,000 10,000,000,000 2,500,000,000 50,000,000,000 20 99 Large >10,000,000,000 >50,000,000,000 >99
An annual revenue of Rp 50 billion is approximately equal to US$3.1 million as of April 2024. Despite their significant contribution to GDP and job creation, Indonesian MSMEs confront a number of obstacles. One of the most significant is capital access: 60 70 percent of MSMEs lack access to financial institutions and their funding options. Other restrictions include inadequate infrastructure, difficulties acquiring company licences and permissions, high tax rates, political insecurity, and improving their brand image in the digital era. 21st century businesses strategically use both their websites and social media in order to advertise their products and control their branding. Quality content on both information streams will positively affect branding and attract customers. The People's Business Credit (Kredit Usaha Rakyat, or KUR [id]) was established in 2007 by President Yudhoyono to extend credit to businesses that were considered "feasible but not bankable". Bank Rakyat Indonesia conducts more than half of KUR lending nationwide. In Jakarta, the capital city of Indonesia, 529 MSMEs with the potential to be funded have been identified by Bank Indonesia. Economy Sector Number of Companies Processing Industry 151 Health Services and Social Activities 1 Rental leasing services without option rights, employment, travel agents and other business support 9 Professional, Scientific And Technical Services 11 Other Service Activities 21 Arts, Entertainment And Recreation 1 Construction 2 Water Procurement, Waste Management And Recycling, Waste And Garbage Disposal And Cleaning 1 Provision of Accommodation and Provision of Food and Drink 80 Wholesale and retail trade of car and motorcycle repair and maintenance 236 Agriculture, Forestry, and Fisheries 16
Philippines
According to the Department of Trade and Industry's 2020 List of Establishments report, there are 957,620 registered business enterprises operating in the country, composed of 99.51% MSMEs and 0.49% large firms. The MSMEs consist of 88.77% microenterprises, 10.25% small enterprises, and 0.49% medium enterprises. Among the top industry sectors include (1) wholesale and retail trade; repair of motor vehicles and motorcycles (445,386); (2) accommodation and food service activities (134,046); (3) manufacturing (110,916); (4) other service activities (62,376); and (5) financial and insurance activities (45,558) which accounted for about 83.77% of the total number of MSME establishments. Prior to the pandemic, MSMEs generated more than 5.38 million jobs or 62.66% of the country's total employment with a 29.38% share from micro enterprises followed by 25.78% and 7.50% for small and medium enterprises. Europe
European Union
Small companies are important to the European economy as they account for 99.8% of non financial enterprises in the European Union (EU) and employ two thirds of the workforce in the EU. The majority of European firms are small and medium sized enterprises (SMEs), employing over 100 million people. Due to the COVID 19 pandemic, a large majority of SMEs saw a decline in revenue during 2020 2021. Medium sized businesses (or mid caps) play an important role in the European economy, accounting for a considerable part of employment and wealth production. According to a recent European Commission analysis, mid cap companies (250 3000 people) make up about 17% of total employment and 21% of turnover in the EU27 business sector. Micro firms (with fewer than nine employees) employ 38% of the total workforce, while SMEs with fewer than 250 employees account for 34.4%. Larger (XL) firms with 3,000 or more employees account for 10.1% of overall employment in EU business sectors. According to Eurostat SBS statistics, in 2021, tiny enterprises (0 9 workers) and SMEs (excluding micro firms) employed around 30% and 34.5% of the entire workforce in EU27 business sectors, while bigger firms (250+ employees) contributed for 36.4% of overall employment. The pandemic has had a greater impact on SMEs than on large businesses, with an average sales loss of 26% versus 23% for large businesses. Government assistance appears to have benefited SMEs more than large corporations among the companies that do have overdraft facilities, indicating a successful application of policies to ease financial limitations for SMEs even when they receive help from the banking sector. The EIB Group contributed more than €16.35 billion to small and medium sized firms in 2022. SMEs were more quick in altering output during the pandemic, despite the intensity of the shock. In reaction to the crisis, one third of major enterprises altered their output or services, compared to 37% of SMEs. The criteria for defining the size of a business differ from country to country, with many countries having programs of business rate reduction and financial subsidy for SMEs. According to the European Commission, SMEs are enterprises which meet the following definition of staff headcount and either the turnover or balance sheet total definitions:
Company category Staff headcount Turnover Balance sheet total Medium sized < 250 ≤ €50 million ≤ €43 million Small < 50 ≤ €10 million ≤ €10 million Micro < 10 ≤ €2 million ≤ €2 million
In July 2011, the European Commission said it would open a consultation on the definition of SMEs in 2012. A consultation document was issued on 6 February 2018 and the consultation period closed on 6 May 2018. as of November 2019, no conclusions or responses have yet emerged. In Europe, there are three broad parameters that define SMEs:
Micro enterprises have up to 10 employees
Small enterprises have up to 50 employees
Medium sized enterprises have up to 250 employees. The European definition of SME follows: "The category of micro, small and medium sized enterprises (SMEs) is made up of enterprises which employ fewer than 250 persons and which have an annual turnover not exceeding 50 million euro, and/or an annual balance sheet total not exceeding 43 million euro." In order to prepare for an evaluation and revision of some features of the small and medium sized enterprises definition European Union established public consultation period from 6 February 2018 to 6 May 2018. Public consultation is available for all EU member country citizens and organizations. Especially, national and regional authorities, enterprises, business associations or organizations, venture capital providers, research and academic institutions, and individual citizens are expected as the main contributors. EU member states have had individual definitions of what constitutes an SME. For example, the definition in Germany had a limit of 255 employees, while in Belgium it could have been 100. The result is that while a Belgian business of 249 employees would be taxed at full rate in Belgium, it would nevertheless be eligible for SME subsidy under a European labelled programme. SMEs are a crucial element in the supplier network of large enterprises which are already on their way towards Industry 4.0. According to German economist Hans Heinrich Bass, "empirical research on SME as well as policies to promote SME have a long tradition in [West] Germany, dating back into the 19th century. Until the mid 20th century, most researchers considered SME as an impediment to further economic development and SME policies were thus designed in the framework of social policies. Only the Ordoliberalism school, the founding fathers of Germany's social market economy, discovered their strengths, considered SME as a solution to mid 20th century economic problems (mass unemployment, abuse of economic power), and laid the foundations for non selective (functional) industrial policies to promote SMEs." Only around 20% of European SMEs are substantially digitalized, compared to almost 50% of major businesses. Small and medium sized companies make up 56.2% of the non financial sector. Smaller companies account for more than 60% of the value contributed to the non financial sector in Belgium, Italy, and Spain, three of the nations worst hit by the COVID 19 pandemic. An estimated 50% of Europe's small firms may fail because they lack the substantial financial reserves required to weather the crisis. With around 338,000 functioning in Bulgaria in 2022, SMEs and mid caps are major contributors in the Bulgarian economy. They also employ over 75% of the workforce and create 65% of the economy's added value. The results of an EU survey conducted in 2021 suggest that during the pandemic, in countries with larger fiscal packages, SMEs were on average more likely to experience bankruptcy even after controlling for the size of the shock, the use of bank financing, and country and sector fixed effects. When policy assistance rises by 1% of GDP, the probabilities of bankruptcy for a SME are 2.7 times higher than for a non SME. Credit limitations are especially difficult for SMEs and new businesses to overcome. Credit constraints affect 24% of SMEs and 27% of young businesses. Poland
The SME sector in Poland generates almost 50% of the GDP, and out of that, for instance, in 2011, micro companies generated 29.6%, small companies 7.7%, and medium companies 10.4% (big companies 24.0%; other entities 16.5%, and revenues from customs duties and taxes generated 11.9%). In 2011, out of the total of 1,784,603 entities operating in Poland, merely 3,189 were classified as "large", so 1,781,414 were micro, small, or medium. SMEs employed 6.3 million people out of the total of 9.0 million of labour employed in the private sector. In Poland in 2011 there were 36.2 SMEs per 1,000 inhabitants. Nearly seven million people are employed by small businesses in Poland, which accounts for around half of the country's GDP, yet smaller businesses are less likely than larger ones to invest in strategies to combat climate change or boost energy efficiency. In October 2021, the Bank Ochrony rodowiska, a Polish bank that specializes in funding environmental protection initiatives received €75 million from the European Investment Bank (EIB) for these small enterprises. The Polish bank wants to use at least 50% of the loan for initiatives with a clear emphasis on tackling climate change, such improving building energy efficiency or turning to renewable energy sources like solar power. The money is set to be distributed across Poland, with around 80% of it projected to go to cohesive regions. Very small companies are called in the UK micro entities, which have simpler financial reporting requirements. Such micro enterprises must meet any two of the following criteria: balance sheet £316,000 or less; turnover £632,000 or less; employees 10 or less. Many small and medium sized businesses form part of the UK's currently growing Mittelstand, or Brittelstand'' as it is also sometimes named. These are businesses in Britain that are not only small or medium but also have a much broader set of values and more elastic definition. The Department for Business Innovation and Skills estimated that at the start of 2014, 99.3% of UK private sector businesses were SMEs, with their £1.6 trillion annual turnover accounting for 47% of private sector turnover. In order to support SMEs, the UK government set a target in 2010 "that 25% of government’s spend, either directly or in supply chains, goes to SMEs by 2015"; it achieved this by 2013.
| Тип | Максимальные активы, Rp | Валовый доход, Rp | Количество сотрудников |
|---|---|---|---|
| Микро | максимум 50 000 000 | максимум 300 000 000 | 1-4 |
| Малый | 50 000 000 - 500 000 000 | 300 000 000 - 2 500 000 000 | 5-9 |
| Средний | 500 000 000 - 10 000 000 000 | 2 500 000 000 - 50 000 000 000 | 20-99 |
| Крупный | >10 000 000 000 | >50 000 000 000 | >99 |
Type of business with small personnel numbers
Small and medium sized enterprises (SMEs) or small and medium sized businesses (SMBs) are businesses whose personnel and revenue numbers fall below certain limits. The abbreviation "SME" is used by international organizations such as the World Bank, the OECD, European Union, the United Nations, and the World Trade Organization (WTO). In any given national economy, SMEs sometimes outnumber large companies by a wide margin and also employ many more people. For example, Australian SMEs makeup 98% of all Australian businesses, produce one third of the total GDP (gross domestic product) and employ 4.7 million people. In Chile, in the commercial year 2014, 98.5% of the firms were classified as SMEs. In Tunisia, the self employed workers alone account for about 28% of the total non farm employment, and firms with fewer than 100 employees account for about 62% of total employment. The United States' SMEs generate half of all U. S. jobs, but only 40% of GDP. Developing countries tend to have a larger share of small and medium sized enterprises. Although they create more new jobs than large firms, SMEs also suffer the majority of job destruction/contraction. According to the World Bank Group's 2021 FINDEX database, there is a $1.7 trillion funding gap for formal, women owned micro, small, and medium sized enterprises. Additionally, over 68% of small women owned firms lack access to finance.' Overview
SMEs are important for economic and social reasons, given the sector's role in employment. Due to their sizes, SMEs are heavily influenced by their Chief Executive Officer, a. k. a. CEOs. The CEOs of SMEs are often the founders, owners, and managers of the SMEs. The duties of the CEO in a SME mirror those of the CEO of a large company: the CEO needs to strategically allocate their time, energy, and assets to direct the SMEs. Typically, the CEO is the strategist, champion and leader for developing the SME or the prime reason for the business failing. At the employee level, Petrakis and Kostis (2012) explore the role of interpersonal trust and knowledge in the number of small and medium enterprises. They conclude that knowledge positively affects the number of SMEs, which in turn positively affects interpersonal trust. Note that the empirical results indicate that interpersonal trust does not affect the number of SMEs. Therefore, although knowledge development can reinforce SMEs, trust becomes widespread in a society when the number of SMEs is greater. Legal boundary on SMEs around the world
Multilateral organizations have been criticized for using one measure for all. The legal boundary of SMEs around the world vary, and below is a list of the upper limits of SMEs in some countries. Africa
African small businesses frequently struggle to get the cash they require to thrive. According to the SME Finance Forum, the formal financing gap for African SMEs averaged 17% of GDP across the 43 countries assessed in 2017. According to the World Bank, women own 58% of all MSMEs in Africa. The European Investment Bank's Banking in Africa survey, 2021 suggests that most of the responding banks had a non performing loan (NPL) ratio of at least 5%. NPLs account for at least 10% of the SME portfolio in approximately one third of African banks. Furthermore, 50% of the banks had at least 5% of their SME portfolio under the moratorium, and 40% had at least 5% of SME loans under some type of restructuring. Somalia
In Somalia, the term is SME (for "small, medium, and micro enterprises"); elsewhere in Africa, MSME stands for "micro, small, and medium enterprises". An SME is defined as a small business that has more than 30 employees but less than 250 employees. South Africa
In the National Small Business Amendment Act 2004, micro businesses in the different sectors, varying from the manufacturing to the retail sectors, are defined as businesses with five or fewer employees and a turnover of up to R100,000 ZAR ($6,900). Very small businesses employ between 6 and 20 employees, while small businesses employ between 21 and 50 employees. The upper limit for turnover in a small business varies from R1 million ($69,200) in the agricultural sector to R13 million ($899,800) in the catering, accommodations and other trade sectors as well as in the manufacturing sector, with a maximum of R32 million ($2,214,800) in the wholesale trade sector. Medium sized businesses''' usually employ up to 200 people (100 in the agricultural sector), and the maximum turnover varies from R5 million ($346,100) in the agricultural sector to R51 ($3,529,800) million in the manufacturing sector and R64 ($4,429,600) million in the wholesale trade, commercial agents and allied services sector. A comprehensive definition of an SME in South Africa is, therefore, an enterprise with one or more of the following characteristics:
Fewer than 200 employees,
Annual turnover of less than R64 million,
Capital assets of less than R10 million,
Direct managerial involvement by owners
Asia
SMEs account for nearly 90% of all company entities in developing Asian countries and are the principal private sector employers, supplying 50 80% of all jobs. SMEs cover 97 99% of all firms in South east Asia, contributing considerably to each country's GDP—for example, 46% in Singapore, 57% in Indonesia, and over 40% in other nations. 98% of business establishments in Hong Kong are defined as SMEs and employed 45% of the work force. India
India defines Micro, Small and Medium Enterprises based on dual criteria of investment and turnover. This definition is provided in Section 7 of Micro, Small & Medium Enterprises Development Act, 2006 (MSMED Act) and was notified in September 2006. The Act provides for the classification of enterprises based on their investment size and the nature of the activity undertaken by that enterprise. As per MSMED Act, enterprises are classified into two categories manufacturing enterprises and service enterprises. For each of these categories, a definition is given to explain what constitutes a micro enterprise or a small enterprise or a medium enterprise. If an enterprise does not fall under the above categories, it would be considered a large scale enterprise. In June 2020, India updated the definition as follows:
+Sr NoClassificationCriteria (in ₹)1Micro EnterprisesInvestment <= 1 cr and Turnover <= 5 cr2Small EnterprisesInvestment <= 10 cr and Turnover <= 50 cr3Medium EnterprisesInvestment <= 50 cr and Turnover <= 250 cr
Businesses that are declared as MSMEs and within specific sectors and criteria can then apply for "priority sector" lending to help with business expenses; banks have annual targets set by the Prime Minister's Task Force on MSMEs for year on year increases of lending to various categories of MSMEs. MSME is considered a key contributor to India's growth and contributes 48% to India's total export. Indonesia
In Indonesia, the government defines micro, small, and medium enterprises (Indonesian: usaha mikro kecil menengah, UMKM) based on their assets and revenues according to Law No. 20/2008:
Type Maximum assets, Rp Gross Revenue, Rp Number of Employee Statistics Indonesia Micro maximum 50,000,000 maximum 300,000,000 1 4 Small 50,000,000 500,000,000 300,000,000 2,500,000,000 5 9 Medium 500,000,000 10,000,000,000 2,500,000,000 50,000,000,000 20 99 Large >10,000,000,000 >50,000,000,000 >99
An annual revenue of Rp 50 billion is approximately equal to US$3.1 million as of April 2024. Despite their significant contribution to GDP and job creation, Indonesian MSMEs confront a number of obstacles. One of the most significant is capital access: 60 70 percent of MSMEs lack access to financial institutions and their funding options. Other restrictions include inadequate infrastructure, difficulties acquiring company licences and permissions, high tax rates, political insecurity, and improving their brand image in the digital era. 21st century businesses strategically use both their websites and social media in order to advertise their products and control their branding. Quality content on both information streams will positively affect branding and attract customers. The People's Business Credit (Kredit Usaha Rakyat, or KUR [id]) was established in 2007 by President Yudhoyono to extend credit to businesses that were considered "feasible but not bankable". Bank Rakyat Indonesia conducts more than half of KUR lending nationwide. In Jakarta, the capital city of Indonesia, 529 MSMEs with the potential to be funded have been identified by Bank Indonesia. Economy Sector Number of Companies Processing Industry 151 Health Services and Social Activities 1 Rental leasing services without option rights, employment, travel agents and other business support 9 Professional, Scientific And Technical Services 11 Other Service Activities 21 Arts, Entertainment And Recreation 1 Construction 2 Water Procurement, Waste Management And Recycling, Waste And Garbage Disposal And Cleaning 1 Provision of Accommodation and Provision of Food and Drink 80 Wholesale and retail trade of car and motorcycle repair and maintenance 236 Agriculture, Forestry, and Fisheries 16
Philippines
According to the Department of Trade and Industry's 2020 List of Establishments report, there are 957,620 registered business enterprises operating in the country, composed of 99.51% MSMEs and 0.49% large firms. The MSMEs consist of 88.77% microenterprises, 10.25% small enterprises, and 0.49% medium enterprises. Among the top industry sectors include (1) wholesale and retail trade; repair of motor vehicles and motorcycles (445,386); (2) accommodation and food service activities (134,046); (3) manufacturing (110,916); (4) other service activities (62,376); and (5) financial and insurance activities (45,558) which accounted for about 83.77% of the total number of MSME establishments. Prior to the pandemic, MSMEs generated more than 5.38 million jobs or 62.66% of the country's total employment with a 29.38% share from micro enterprises followed by 25.78% and 7.50% for small and medium enterprises. Europe
European Union
Small companies are important to the European economy as they account for 99.8% of non financial enterprises in the European Union (EU) and employ two thirds of the workforce in the EU. The majority of European firms are small and medium sized enterprises (SMEs), employing over 100 million people. Due to the COVID 19 pandemic, a large majority of SMEs saw a decline in revenue during 2020 2021. Medium sized businesses (or mid caps) play an important role in the European economy, accounting for a considerable part of employment and wealth production. According to a recent European Commission analysis, mid cap companies (250 3000 people) make up about 17% of total employment and 21% of turnover in the EU27 business sector. Micro firms (with fewer than nine employees) employ 38% of the total workforce, while SMEs with fewer than 250 employees account for 34.4%. Larger (XL) firms with 3,000 or more employees account for 10.1% of overall employment in EU business sectors. According to Eurostat SBS statistics, in 2021, tiny enterprises (0 9 workers) and SMEs (excluding micro firms) employed around 30% and 34.5% of the entire workforce in EU27 business sectors, while bigger firms (250+ employees) contributed for 36.4% of overall employment. The pandemic has had a greater impact on SMEs than on large businesses, with an average sales loss of 26% versus 23% for large businesses. Government assistance appears to have benefited SMEs more than large corporations among the companies that do have overdraft facilities, indicating a successful application of policies to ease financial limitations for SMEs even when they receive help from the banking sector. The EIB Group contributed more than €16.35 billion to small and medium sized firms in 2022. SMEs were more quick in altering output during the pandemic, despite the intensity of the shock. In reaction to the crisis, one third of major enterprises altered their output or services, compared to 37% of SMEs. The criteria for defining the size of a business differ from country to country, with many countries having programs of business rate reduction and financial subsidy for SMEs. According to the European Commission, SMEs are enterprises which meet the following definition of staff headcount and either the turnover or balance sheet total definitions:
Company category Staff headcount Turnover Balance sheet total Medium sized < 250 ≤ €50 million ≤ €43 million Small < 50 ≤ €10 million ≤ €10 million Micro < 10 ≤ €2 million ≤ €2 million
In July 2011, the European Commission said it would open a consultation on the definition of SMEs in 2012. A consultation document was issued on 6 February 2018 and the consultation period closed on 6 May 2018. as of November 2019, no conclusions or responses have yet emerged. In Europe, there are three broad parameters that define SMEs:
Micro enterprises have up to 10 employees
Small enterprises have up to 50 employees
Medium sized enterprises have up to 250 employees. The European definition of SME follows: "The category of micro, small and medium sized enterprises (SMEs) is made up of enterprises which employ fewer than 250 persons and which have an annual turnover not exceeding 50 million euro, and/or an annual balance sheet total not exceeding 43 million euro." In order to prepare for an evaluation and revision of some features of the small and medium sized enterprises definition European Union established public consultation period from 6 February 2018 to 6 May 2018. Public consultation is available for all EU member country citizens and organizations. Especially, national and regional authorities, enterprises, business associations or organizations, venture capital providers, research and academic institutions, and individual citizens are expected as the main contributors. EU member states have had individual definitions of what constitutes an SME. For example, the definition in Germany had a limit of 255 employees, while in Belgium it could have been 100. The result is that while a Belgian business of 249 employees would be taxed at full rate in Belgium, it would nevertheless be eligible for SME subsidy under a European labelled programme. SMEs are a crucial element in the supplier network of large enterprises which are already on their way towards Industry 4.0. According to German economist Hans Heinrich Bass, "empirical research on SME as well as policies to promote SME have a long tradition in [West] Germany, dating back into the 19th century. Until the mid 20th century, most researchers considered SME as an impediment to further economic development and SME policies were thus designed in the framework of social policies. Only the Ordoliberalism school, the founding fathers of Germany's social market economy, discovered their strengths, considered SME as a solution to mid 20th century economic problems (mass unemployment, abuse of economic power), and laid the foundations for non selective (functional) industrial policies to promote SMEs." Only around 20% of European SMEs are substantially digitalized, compared to almost 50% of major businesses. Small and medium sized companies make up 56.2% of the non financial sector. Smaller companies account for more than 60% of the value contributed to the non financial sector in Belgium, Italy, and Spain, three of the nations worst hit by the COVID 19 pandemic. An estimated 50% of Europe's small firms may fail because they lack the substantial financial reserves required to weather the crisis. With around 338,000 functioning in Bulgaria in 2022, SMEs and mid caps are major contributors in the Bulgarian economy. They also employ over 75% of the workforce and create 65% of the economy's added value. The results of an EU survey conducted in 2021 suggest that during the pandemic, in countries with larger fiscal packages, SMEs were on average more likely to experience bankruptcy even after controlling for the size of the shock, the use of bank financing, and country and sector fixed effects. When policy assistance rises by 1% of GDP, the probabilities of bankruptcy for a SME are 2.7 times higher than for a non SME. Credit limitations are especially difficult for SMEs and new businesses to overcome. Credit constraints affect 24% of SMEs and 27% of young businesses. Poland
The SME sector in Poland generates almost 50% of the GDP, and out of that, for instance, in 2011, micro companies generated 29.6%, small companies 7.7%, and medium companies 10.4% (big companies 24.0%; other entities 16.5%, and revenues from customs duties and taxes generated 11.9%). In 2011, out of the total of 1,784,603 entities operating in Poland, merely 3,189 were classified as "large", so 1,781,414 were micro, small, or medium. SMEs employed 6.3 million people out of the total of 9.0 million of labour employed in the private sector. In Poland in 2011 there were 36.2 SMEs per 1,000 inhabitants. Nearly seven million people are employed by small businesses in Poland, which accounts for around half of the country's GDP, yet smaller businesses are less likely than larger ones to invest in strategies to combat climate change or boost energy efficiency. In October 2021, the Bank Ochrony rodowiska, a Polish bank that specializes in funding environmental protection initiatives received €75 million from the European Investment Bank (EIB) for these small enterprises. The Polish bank wants to use at least 50% of the loan for initiatives with a clear emphasis on tackling climate change, such improving building energy efficiency or turning to renewable energy sources like solar power. The money is set to be distributed across Poland, with around 80% of it projected to go to cohesive regions. Very small companies are called in the UK micro entities, which have simpler financial reporting requirements. Such micro enterprises must meet any two of the following criteria: balance sheet £316,000 or less; turnover £632,000 or less; employees 10 or less. Many small and medium sized businesses form part of the UK's currently growing Mittelstand, or Brittelstand'' as it is also sometimes named. These are businesses in Britain that are not only small or medium but also have a much broader set of values and more elastic definition. The Department for Business Innovation and Skills estimated that at the start of 2014, 99.3% of UK private sector businesses were SMEs, with their £1.6 trillion annual turnover accounting for 47% of private sector turnover. In order to support SMEs, the UK government set a target in 2010 "that 25% of government’s spend, either directly or in supply chains, goes to SMEs by 2015"; it achieved this by 2013.
Small and medium sized enterprises (SMEs) or small and medium sized businesses (SMBs) are businesses whose personnel and revenue numbers fall below certain limits. The abbreviation "SME" is used by international organizations such as the World Bank, the OECD, European Union, the United Nations, and the World Trade Organization (WTO). In any given national economy, SMEs sometimes outnumber large companies by a wide margin and also employ many more people. For example, Australian SMEs makeup 98% of all Australian businesses, produce one third of the total GDP (gross domestic product) and employ 4.7 million people. In Chile, in the commercial year 2014, 98.5% of the firms were classified as SMEs. In Tunisia, the self employed workers alone account for about 28% of the total non farm employment, and firms with fewer than 100 employees account for about 62% of total employment. The United States' SMEs generate half of all U. S. jobs, but only 40% of GDP. Developing countries tend to have a larger share of small and medium sized enterprises. Although they create more new jobs than large firms, SMEs also suffer the majority of job destruction/contraction. According to the World Bank Group's 2021 FINDEX database, there is a $1.7 trillion funding gap for formal, women owned micro, small, and medium sized enterprises. Additionally, over 68% of small women owned firms lack access to finance.' Overview
SMEs are important for economic and social reasons, given the sector's role in employment. Due to their sizes, SMEs are heavily influenced by their Chief Executive Officer, a. k. a. CEOs. The CEOs of SMEs are often the founders, owners, and managers of the SMEs. The duties of the CEO in a SME mirror those of the CEO of a large company: the CEO needs to strategically allocate their time, energy, and assets to direct the SMEs. Typically, the CEO is the strategist, champion and leader for developing the SME or the prime reason for the business failing. At the employee level, Petrakis and Kostis (2012) explore the role of interpersonal trust and knowledge in the number of small and medium enterprises. They conclude that knowledge positively affects the number of SMEs, which in turn positively affects interpersonal trust. Note that the empirical results indicate that interpersonal trust does not affect the number of SMEs. Therefore, although knowledge development can reinforce SMEs, trust becomes widespread in a society when the number of SMEs is greater. Legal boundary on SMEs around the world
Multilateral organizations have been criticized for using one measure for all. The legal boundary of SMEs around the world vary, and below is a list of the upper limits of SMEs in some countries. Africa
African small businesses frequently struggle to get the cash they require to thrive. According to the SME Finance Forum, the formal financing gap for African SMEs averaged 17% of GDP across the 43 countries assessed in 2017. According to the World Bank, women own 58% of all MSMEs in Africa. The European Investment Bank's Banking in Africa survey, 2021 suggests that most of the responding banks had a non performing loan (NPL) ratio of at least 5%. NPLs account for at least 10% of the SME portfolio in approximately one third of African banks. Furthermore, 50% of the banks had at least 5% of their SME portfolio under the moratorium, and 40% had at least 5% of SME loans under some type of restructuring. Somalia
In Somalia, the term is SME (for "small, medium, and micro enterprises"); elsewhere in Africa, MSME stands for "micro, small, and medium enterprises". An SME is defined as a small business that has more than 30 employees but less than 250 employees. South Africa
In the National Small Business Amendment Act 2004, micro businesses in the different sectors, varying from the manufacturing to the retail sectors, are defined as businesses with five or fewer employees and a turnover of up to R100,000 ZAR ($6,900). Very small businesses employ between 6 and 20 employees, while small businesses employ between 21 and 50 employees. The upper limit for turnover in a small business varies from R1 million ($69,200) in the agricultural sector to R13 million ($899,800) in the catering, accommodations and other trade sectors as well as in the manufacturing sector, with a maximum of R32 million ($2,214,800) in the wholesale trade sector. Medium sized businesses''' usually employ up to 200 people (100 in the agricultural sector), and the maximum turnover varies from R5 million ($346,100) in the agricultural sector to R51 ($3,529,800) million in the manufacturing sector and R64 ($4,429,600) million in the wholesale trade, commercial agents and allied services sector. A comprehensive definition of an SME in South Africa is, therefore, an enterprise with one or more of the following characteristics:
Fewer than 200 employees,
Annual turnover of less than R64 million,
Capital assets of less than R10 million,
Direct managerial involvement by owners
Asia
SMEs account for nearly 90% of all company entities in developing Asian countries and are the principal private sector employers, supplying 50 80% of all jobs. SMEs cover 97 99% of all firms in South east Asia, contributing considerably to each country's GDP—for example, 46% in Singapore, 57% in Indonesia, and over 40% in other nations. 98% of business establishments in Hong Kong are defined as SMEs and employed 45% of the work force. India
India defines Micro, Small and Medium Enterprises based on dual criteria of investment and turnover. This definition is provided in Section 7 of Micro, Small & Medium Enterprises Development Act, 2006 (MSMED Act) and was notified in September 2006. The Act provides for the classification of enterprises based on their investment size and the nature of the activity undertaken by that enterprise. As per MSMED Act, enterprises are classified into two categories manufacturing enterprises and service enterprises. For each of these categories, a definition is given to explain what constitutes a micro enterprise or a small enterprise or a medium enterprise. If an enterprise does not fall under the above categories, it would be considered a large scale enterprise. In June 2020, India updated the definition as follows:
+Sr NoClassificationCriteria (in ₹)1Micro EnterprisesInvestment <= 1 cr and Turnover <= 5 cr2Small EnterprisesInvestment <= 10 cr and Turnover <= 50 cr3Medium EnterprisesInvestment <= 50 cr and Turnover <= 250 cr
Businesses that are declared as MSMEs and within specific sectors and criteria can then apply for "priority sector" lending to help with business expenses; banks have annual targets set by the Prime Minister's Task Force on MSMEs for year on year increases of lending to various categories of MSMEs. MSME is considered a key contributor to India's growth and contributes 48% to India's total export. Indonesia
In Indonesia, the government defines micro, small, and medium enterprises (Indonesian: usaha mikro kecil menengah, UMKM) based on their assets and revenues according to Law No. 20/2008:
Type Maximum assets, Rp Gross Revenue, Rp Number of Employee Statistics Indonesia Micro maximum 50,000,000 maximum 300,000,000 1 4 Small 50,000,000 500,000,000 300,000,000 2,500,000,000 5 9 Medium 500,000,000 10,000,000,000 2,500,000,000 50,000,000,000 20 99 Large >10,000,000,000 >50,000,000,000 >99
An annual revenue of Rp 50 billion is approximately equal to US$3.1 million as of April 2024. Despite their significant contribution to GDP and job creation, Indonesian MSMEs confront a number of obstacles. One of the most significant is capital access: 60 70 percent of MSMEs lack access to financial institutions and their funding options. Other restrictions include inadequate infrastructure, difficulties acquiring company licences and permissions, high tax rates, political insecurity, and improving their brand image in the digital era. 21st century businesses strategically use both their websites and social media in order to advertise their products and control their branding. Quality content on both information streams will positively affect branding and attract customers. The People's Business Credit (Kredit Usaha Rakyat, or KUR [id]) was established in 2007 by President Yudhoyono to extend credit to businesses that were considered "feasible but not bankable". Bank Rakyat Indonesia conducts more than half of KUR lending nationwide. In Jakarta, the capital city of Indonesia, 529 MSMEs with the potential to be funded have been identified by Bank Indonesia. Economy Sector Number of Companies Processing Industry 151 Health Services and Social Activities 1 Rental leasing services without option rights, employment, travel agents and other business support 9 Professional, Scientific And Technical Services 11 Other Service Activities 21 Arts, Entertainment And Recreation 1 Construction 2 Water Procurement, Waste Management And Recycling, Waste And Garbage Disposal And Cleaning 1 Provision of Accommodation and Provision of Food and Drink 80 Wholesale and retail trade of car and motorcycle repair and maintenance 236 Agriculture, Forestry, and Fisheries 16
Philippines
According to the Department of Trade and Industry's 2020 List of Establishments report, there are 957,620 registered business enterprises operating in the country, composed of 99.51% MSMEs and 0.49% large firms. The MSMEs consist of 88.77% microenterprises, 10.25% small enterprises, and 0.49% medium enterprises. Among the top industry sectors include (1) wholesale and retail trade; repair of motor vehicles and motorcycles (445,386); (2) accommodation and food service activities (134,046); (3) manufacturing (110,916); (4) other service activities (62,376); and (5) financial and insurance activities (45,558) which accounted for about 83.77% of the total number of MSME establishments. Prior to the pandemic, MSMEs generated more than 5.38 million jobs or 62.66% of the country's total employment with a 29.38% share from micro enterprises followed by 25.78% and 7.50% for small and medium enterprises. Europe
European Union
Small companies are important to the European economy as they account for 99.8% of non financial enterprises in the European Union (EU) and employ two thirds of the workforce in the EU. The majority of European firms are small and medium sized enterprises (SMEs), employing over 100 million people. Due to the COVID 19 pandemic, a large majority of SMEs saw a decline in revenue during 2020 2021. Medium sized businesses (or mid caps) play an important role in the European economy, accounting for a considerable part of employment and wealth production. According to a recent European Commission analysis, mid cap companies (250 3000 people) make up about 17% of total employment and 21% of turnover in the EU27 business sector. Micro firms (with fewer than nine employees) employ 38% of the total workforce, while SMEs with fewer than 250 employees account for 34.4%. Larger (XL) firms with 3,000 or more employees account for 10.1% of overall employment in EU business sectors. According to Eurostat SBS statistics, in 2021, tiny enterprises (0 9 workers) and SMEs (excluding micro firms) employed around 30% and 34.5% of the entire workforce in EU27 business sectors, while bigger firms (250+ employees) contributed for 36.4% of overall employment. The pandemic has had a greater impact on SMEs than on large businesses, with an average sales loss of 26% versus 23% for large businesses. Government assistance appears to have benefited SMEs more than large corporations among the companies that do have overdraft facilities, indicating a successful application of policies to ease financial limitations for SMEs even when they receive help from the banking sector. The EIB Group contributed more than €16.35 billion to small and medium sized firms in 2022. SMEs were more quick in altering output during the pandemic, despite the intensity of the shock. In reaction to the crisis, one third of major enterprises altered their output or services, compared to 37% of SMEs. The criteria for defining the size of a business differ from country to country, with many countries having programs of business rate reduction and financial subsidy for SMEs. According to the European Commission, SMEs are enterprises which meet the following definition of staff headcount and either the turnover or balance sheet total definitions:
Company category Staff headcount Turnover Balance sheet total Medium sized < 250 ≤ €50 million ≤ €43 million Small < 50 ≤ €10 million ≤ €10 million Micro < 10 ≤ €2 million ≤ €2 million
In July 2011, the European Commission said it would open a consultation on the definition of SMEs in 2012. A consultation document was issued on 6 February 2018 and the consultation period closed on 6 May 2018. as of November 2019, no conclusions or responses have yet emerged. In Europe, there are three broad parameters that define SMEs:
Micro enterprises have up to 10 employees
Small enterprises have up to 50 employees
Medium sized enterprises have up to 250 employees. The European definition of SME follows: "The category of micro, small and medium sized enterprises (SMEs) is made up of enterprises which employ fewer than 250 persons and which have an annual turnover not exceeding 50 million euro, and/or an annual balance sheet total not exceeding 43 million euro." In order to prepare for an evaluation and revision of some features of the small and medium sized enterprises definition European Union established public consultation period from 6 February 2018 to 6 May 2018. Public consultation is available for all EU member country citizens and organizations. Especially, national and regional authorities, enterprises, business associations or organizations, venture capital providers, research and academic institutions, and individual citizens are expected as the main contributors. EU member states have had individual definitions of what constitutes an SME. For example, the definition in Germany had a limit of 255 employees, while in Belgium it could have been 100. The result is that while a Belgian business of 249 employees would be taxed at full rate in Belgium, it would nevertheless be eligible for SME subsidy under a European labelled programme. SMEs are a crucial element in the supplier network of large enterprises which are already on their way towards Industry 4.0. According to German economist Hans Heinrich Bass, "empirical research on SME as well as policies to promote SME have a long tradition in [West] Germany, dating back into the 19th century. Until the mid 20th century, most researchers considered SME as an impediment to further economic development and SME policies were thus designed in the framework of social policies. Only the Ordoliberalism school, the founding fathers of Germany's social market economy, discovered their strengths, considered SME as a solution to mid 20th century economic problems (mass unemployment, abuse of economic power), and laid the foundations for non selective (functional) industrial policies to promote SMEs." Only around 20% of European SMEs are substantially digitalized, compared to almost 50% of major businesses. Small and medium sized companies make up 56.2% of the non financial sector. Smaller companies account for more than 60% of the value contributed to the non financial sector in Belgium, Italy, and Spain, three of the nations worst hit by the COVID 19 pandemic. An estimated 50% of Europe's small firms may fail because they lack the substantial financial reserves required to weather the crisis. With around 338,000 functioning in Bulgaria in 2022, SMEs and mid caps are major contributors in the Bulgarian economy. They also employ over 75% of the workforce and create 65% of the economy's added value. The results of an EU survey conducted in 2021 suggest that during the pandemic, in countries with larger fiscal packages, SMEs were on average more likely to experience bankruptcy even after controlling for the size of the shock, the use of bank financing, and country and sector fixed effects. When policy assistance rises by 1% of GDP, the probabilities of bankruptcy for a SME are 2.7 times higher than for a non SME. Credit limitations are especially difficult for SMEs and new businesses to overcome. Credit constraints affect 24% of SMEs and 27% of young businesses. Poland
The SME sector in Poland generates almost 50% of the GDP, and out of that, for instance, in 2011, micro companies generated 29.6%, small companies 7.7%, and medium companies 10.4% (big companies 24.0%; other entities 16.5%, and revenues from customs duties and taxes generated 11.9%). In 2011, out of the total of 1,784,603 entities operating in Poland, merely 3,189 were classified as "large", so 1,781,414 were micro, small, or medium. SMEs employed 6.3 million people out of the total of 9.0 million of labour employed in the private sector. In Poland in 2011 there were 36.2 SMEs per 1,000 inhabitants. Nearly seven million people are employed by small businesses in Poland, which accounts for around half of the country's GDP, yet smaller businesses are less likely than larger ones to invest in strategies to combat climate change or boost energy efficiency. In October 2021, the Bank Ochrony rodowiska, a Polish bank that specializes in funding environmental protection initiatives received €75 million from the European Investment Bank (EIB) for these small enterprises. The Polish bank wants to use at least 50% of the loan for initiatives with a clear emphasis on tackling climate change, such improving building energy efficiency or turning to renewable energy sources like solar power. The money is set to be distributed across Poland, with around 80% of it projected to go to cohesive regions. Very small companies are called in the UK micro entities, which have simpler financial reporting requirements. Such micro enterprises must meet any two of the following criteria: balance sheet £316,000 or less; turnover £632,000 or less; employees 10 or less. Many small and medium sized businesses form part of the UK's currently growing Mittelstand, or Brittelstand'' as it is also sometimes named. These are businesses in Britain that are not only small or medium but also have a much broader set of values and more elastic definition. The Department for Business Innovation and Skills estimated that at the start of 2014, 99.3% of UK private sector businesses were SMEs, with their £1.6 trillion annual turnover accounting for 47% of private sector turnover. In order to support SMEs, the UK government set a target in 2010 "that 25% of government’s spend, either directly or in supply chains, goes to SMEs by 2015"; it achieved this by 2013.
Годовой доход в размере 50 миллиардов Rp примерно равен 3,1 миллиона долларов США по состоянию на апрель 2024 года. Несмотря на их значительный вклад в ВВП и создание рабочих мест, индонезийские МСП сталкиваются с рядом препятствий. Одним из наиболее значительных является доступ к капиталу: 60-70% МСП не имеют доступа к финансовым институтам и их вариантам финансирования. Другие ограничения включают недостаточную инфраструктуру, трудности с получением лицензий и разрешений на ведение бизнеса, высокие налоги, политическую нестабильность и улучшение имиджа бренда в цифровую эпоху. 21 век...
Type of business with small personnel numbers
Small and medium sized enterprises (SMEs) or small and medium sized businesses (SMBs) are businesses whose personnel and revenue numbers fall below certain limits. The abbreviation "SME" is used by international organizations such as the World Bank, the OECD, European Union, the United Nations, and the World Trade Organization (WTO). In any given national economy, SMEs sometimes outnumber large companies by a wide margin and also employ many more people. For example, Australian SMEs makeup 98% of all Australian businesses, produce one third of the total GDP (gross domestic product) and employ 4.7 million people. In Chile, in the commercial year 2014, 98.5% of the firms were classified as SMEs. In Tunisia, the self employed workers alone account for about 28% of the total non farm employment, and firms with fewer than 100 employees account for about 62% of total employment. The United States' SMEs generate half of all U. S. jobs, but only 40% of GDP. Developing countries tend to have a larger share of small and medium sized enterprises. Although they create more new jobs than large firms, SMEs also suffer the majority of job destruction/contraction. According to the World Bank Group's 2021 FINDEX database, there is a $1.7 trillion funding gap for formal, women owned micro, small, and medium sized enterprises. Additionally, over 68% of small women owned firms lack access to finance.' Overview
SMEs are important for economic and social reasons, given the sector's role in employment. Due to their sizes, SMEs are heavily influenced by their Chief Executive Officer, a. k. a. CEOs. The CEOs of SMEs are often the founders, owners, and managers of the SMEs. The duties of the CEO in a SME mirror those of the CEO of a large company: the CEO needs to strategically allocate their time, energy, and assets to direct the SMEs. Typically, the CEO is the strategist, champion and leader for developing the SME or the prime reason for the business failing. At the employee level, Petrakis and Kostis (2012) explore the role of interpersonal trust and knowledge in the number of small and medium enterprises. They conclude that knowledge positively affects the number of SMEs, which in turn positively affects interpersonal trust. Note that the empirical results indicate that interpersonal trust does not affect the number of SMEs. Therefore, although knowledge development can reinforce SMEs, trust becomes widespread in a society when the number of SMEs is greater. Legal boundary on SMEs around the world
Multilateral organizations have been criticized for using one measure for all. The legal boundary of SMEs around the world vary, and below is a list of the upper limits of SMEs in some countries. Africa
African small businesses frequently struggle to get the cash they require to thrive. According to the SME Finance Forum, the formal financing gap for African SMEs averaged 17% of GDP across the 43 countries assessed in 2017. According to the World Bank, women own 58% of all MSMEs in Africa. The European Investment Bank's Banking in Africa survey, 2021 suggests that most of the responding banks had a non performing loan (NPL) ratio of at least 5%. NPLs account for at least 10% of the SME portfolio in approximately one third of African banks. Furthermore, 50% of the banks had at least 5% of their SME portfolio under the moratorium, and 40% had at least 5% of SME loans under some type of restructuring. Somalia
In Somalia, the term is SME (for "small, medium, and micro enterprises"); elsewhere in Africa, MSME stands for "micro, small, and medium enterprises". An SME is defined as a small business that has more than 30 employees but less than 250 employees. South Africa
In the National Small Business Amendment Act 2004, micro businesses in the different sectors, varying from the manufacturing to the retail sectors, are defined as businesses with five or fewer employees and a turnover of up to R100,000 ZAR ($6,900). Very small businesses employ between 6 and 20 employees, while small businesses employ between 21 and 50 employees. The upper limit for turnover in a small business varies from R1 million ($69,200) in the agricultural sector to R13 million ($899,800) in the catering, accommodations and other trade sectors as well as in the manufacturing sector, with a maximum of R32 million ($2,214,800) in the wholesale trade sector. Medium sized businesses''' usually employ up to 200 people (100 in the agricultural sector), and the maximum turnover varies from R5 million ($346,100) in the agricultural sector to R51 ($3,529,800) million in the manufacturing sector and R64 ($4,429,600) million in the wholesale trade, commercial agents and allied services sector. A comprehensive definition of an SME in South Africa is, therefore, an enterprise with one or more of the following characteristics:
Fewer than 200 employees,
Annual turnover of less than R64 million,
Capital assets of less than R10 million,
Direct managerial involvement by owners
Asia
SMEs account for nearly 90% of all company entities in developing Asian countries and are the principal private sector employers, supplying 50 80% of all jobs. SMEs cover 97 99% of all firms in South east Asia, contributing considerably to each country's GDP—for example, 46% in Singapore, 57% in Indonesia, and over 40% in other nations. 98% of business establishments in Hong Kong are defined as SMEs and employed 45% of the work force. India
India defines Micro, Small and Medium Enterprises based on dual criteria of investment and turnover. This definition is provided in Section 7 of Micro, Small & Medium Enterprises Development Act, 2006 (MSMED Act) and was notified in September 2006. The Act provides for the classification of enterprises based on their investment size and the nature of the activity undertaken by that enterprise. As per MSMED Act, enterprises are classified into two categories manufacturing enterprises and service enterprises. For each of these categories, a definition is given to explain what constitutes a micro enterprise or a small enterprise or a medium enterprise. If an enterprise does not fall under the above categories, it would be considered a large scale enterprise. In June 2020, India updated the definition as follows:
+Sr NoClassificationCriteria (in ₹)1Micro EnterprisesInvestment <= 1 cr and Turnover <= 5 cr2Small EnterprisesInvestment <= 10 cr and Turnover <= 50 cr3Medium EnterprisesInvestment <= 50 cr and Turnover <= 250 cr
Businesses that are declared as MSMEs and within specific sectors and criteria can then apply for "priority sector" lending to help with business expenses; banks have annual targets set by the Prime Minister's Task Force on MSMEs for year on year increases of lending to various categories of MSMEs. MSME is considered a key contributor to India's growth and contributes 48% to India's total export. Indonesia
In Indonesia, the government defines micro, small, and medium enterprises (Indonesian: usaha mikro kecil menengah, UMKM) based on their assets and revenues according to Law No. 20/2008:
Type Maximum assets, Rp Gross Revenue, Rp Number of Employee Statistics Indonesia Micro maximum 50,000,000 maximum 300,000,000 1 4 Small 50,000,000 500,000,000 300,000,000 2,500,000,000 5 9 Medium 500,000,000 10,000,000,000 2,500,000,000 50,000,000,000 20 99 Large >10,000,000,000 >50,000,000,000 >99
An annual revenue of Rp 50 billion is approximately equal to US$3.1 million as of April 2024. Despite their significant contribution to GDP and job creation, Indonesian MSMEs confront a number of obstacles. One of the most significant is capital access: 60 70 percent of MSMEs lack access to financial institutions and their funding options. Other restrictions include inadequate infrastructure, difficulties acquiring company licences and permissions, high tax rates, political insecurity, and improving their brand image in the digital era. 21st century businesses strategically use both their websites and social media in order to advertise their products and control their branding. Quality content on both information streams will positively affect branding and attract customers. The People's Business Credit (Kredit Usaha Rakyat, or KUR [id]) was established in 2007 by President Yudhoyono to extend credit to businesses that were considered "feasible but not bankable". Bank Rakyat Indonesia conducts more than half of KUR lending nationwide. In Jakarta, the capital city of Indonesia, 529 MSMEs with the potential to be funded have been identified by Bank Indonesia. Economy Sector Number of Companies Processing Industry 151 Health Services and Social Activities 1 Rental leasing services without option rights, employment, travel agents and other business support 9 Professional, Scientific And Technical Services 11 Other Service Activities 21 Arts, Entertainment And Recreation 1 Construction 2 Water Procurement, Waste Management And Recycling, Waste And Garbage Disposal And Cleaning 1 Provision of Accommodation and Provision of Food and Drink 80 Wholesale and retail trade of car and motorcycle repair and maintenance 236 Agriculture, Forestry, and Fisheries 16
Philippines
According to the Department of Trade and Industry's 2020 List of Establishments report, there are 957,620 registered business enterprises operating in the country, composed of 99.51% MSMEs and 0.49% large firms. The MSMEs consist of 88.77% microenterprises, 10.25% small enterprises, and 0.49% medium enterprises. Among the top industry sectors include (1) wholesale and retail trade; repair of motor vehicles and motorcycles (445,386); (2) accommodation and food service activities (134,046); (3) manufacturing (110,916); (4) other service activities (62,376); and (5) financial and insurance activities (45,558) which accounted for about 83.77% of the total number of MSME establishments. Prior to the pandemic, MSMEs generated more than 5.38 million jobs or 62.66% of the country's total employment with a 29.38% share from micro enterprises followed by 25.78% and 7.50% for small and medium enterprises. Europe
European Union
Small companies are important to the European economy as they account for 99.8% of non financial enterprises in the European Union (EU) and employ two thirds of the workforce in the EU. The majority of European firms are small and medium sized enterprises (SMEs), employing over 100 million people. Due to the COVID 19 pandemic, a large majority of SMEs saw a decline in revenue during 2020 2021. Medium sized businesses (or mid caps) play an important role in the European economy, accounting for a considerable part of employment and wealth production. According to a recent European Commission analysis, mid cap companies (250 3000 people) make up about 17% of total employment and 21% of turnover in the EU27 business sector. Micro firms (with fewer than nine employees) employ 38% of the total workforce, while SMEs with fewer than 250 employees account for 34.4%. Larger (XL) firms with 3,000 or more employees account for 10.1% of overall employment in EU business sectors. According to Eurostat SBS statistics, in 2021, tiny enterprises (0 9 workers) and SMEs (excluding micro firms) employed around 30% and 34.5% of the entire workforce in EU27 business sectors, while bigger firms (250+ employees) contributed for 36.4% of overall employment. The pandemic has had a greater impact on SMEs than on large businesses, with an average sales loss of 26% versus 23% for large businesses. Government assistance appears to have benefited SMEs more than large corporations among the companies that do have overdraft facilities, indicating a successful application of policies to ease financial limitations for SMEs even when they receive help from the banking sector. The EIB Group contributed more than €16.35 billion to small and medium sized firms in 2022. SMEs were more quick in altering output during the pandemic, despite the intensity of the shock. In reaction to the crisis, one third of major enterprises altered their output or services, compared to 37% of SMEs. The criteria for defining the size of a business differ from country to country, with many countries having programs of business rate reduction and financial subsidy for SMEs. According to the European Commission, SMEs are enterprises which meet the following definition of staff headcount and either the turnover or balance sheet total definitions:
Company category Staff headcount Turnover Balance sheet total Medium sized < 250 ≤ €50 million ≤ €43 million Small < 50 ≤ €10 million ≤ €10 million Micro < 10 ≤ €2 million ≤ €2 million
In July 2011, the European Commission said it would open a consultation on the definition of SMEs in 2012. A consultation document was issued on 6 February 2018 and the consultation period closed on 6 May 2018. as of November 2019, no conclusions or responses have yet emerged. In Europe, there are three broad parameters that define SMEs:
Micro enterprises have up to 10 employees
Small enterprises have up to 50 employees
Medium sized enterprises have up to 250 employees. The European definition of SME follows: "The category of micro, small and medium sized enterprises (SMEs) is made up of enterprises which employ fewer than 250 persons and which have an annual turnover not exceeding 50 million euro, and/or an annual balance sheet total not exceeding 43 million euro." In order to prepare for an evaluation and revision of some features of the small and medium sized enterprises definition European Union established public consultation period from 6 February 2018 to 6 May 2018. Public consultation is available for all EU member country citizens and organizations. Especially, national and regional authorities, enterprises, business associations or organizations, venture capital providers, research and academic institutions, and individual citizens are expected as the main contributors. EU member states have had individual definitions of what constitutes an SME. For example, the definition in Germany had a limit of 255 employees, while in Belgium it could have been 100. The result is that while a Belgian business of 249 employees would be taxed at full rate in Belgium, it would nevertheless be eligible for SME subsidy under a European labelled programme. SMEs are a crucial element in the supplier network of large enterprises which are already on their way towards Industry 4.0. According to German economist Hans Heinrich Bass, "empirical research on SME as well as policies to promote SME have a long tradition in [West] Germany, dating back into the 19th century. Until the mid 20th century, most researchers considered SME as an impediment to further economic development and SME policies were thus designed in the framework of social policies. Only the Ordoliberalism school, the founding fathers of Germany's social market economy, discovered their strengths, considered SME as a solution to mid 20th century economic problems (mass unemployment, abuse of economic power), and laid the foundations for non selective (functional) industrial policies to promote SMEs." Only around 20% of European SMEs are substantially digitalized, compared to almost 50% of major businesses. Small and medium sized companies make up 56.2% of the non financial sector. Smaller companies account for more than 60% of the value contributed to the non financial sector in Belgium, Italy, and Spain, three of the nations worst hit by the COVID 19 pandemic. An estimated 50% of Europe's small firms may fail because they lack the substantial financial reserves required to weather the crisis. With around 338,000 functioning in Bulgaria in 2022, SMEs and mid caps are major contributors in the Bulgarian economy. They also employ over 75% of the workforce and create 65% of the economy's added value. The results of an EU survey conducted in 2021 suggest that during the pandemic, in countries with larger fiscal packages, SMEs were on average more likely to experience bankruptcy even after controlling for the size of the shock, the use of bank financing, and country and sector fixed effects. When policy assistance rises by 1% of GDP, the probabilities of bankruptcy for a SME are 2.7 times higher than for a non SME. Credit limitations are especially difficult for SMEs and new businesses to overcome. Credit constraints affect 24% of SMEs and 27% of young businesses. Poland
The SME sector in Poland generates almost 50% of the GDP, and out of that, for instance, in 2011, micro companies generated 29.6%, small companies 7.7%, and medium companies 10.4% (big companies 24.0%; other entities 16.5%, and revenues from customs duties and taxes generated 11.9%). In 2011, out of the total of 1,784,603 entities operating in Poland, merely 3,189 were classified as "large", so 1,781,414 were micro, small, or medium. SMEs employed 6.3 million people out of the total of 9.0 million of labour employed in the private sector. In Poland in 2011 there were 36.2 SMEs per 1,000 inhabitants. Nearly seven million people are employed by small businesses in Poland, which accounts for around half of the country's GDP, yet smaller businesses are less likely than larger ones to invest in strategies to combat climate change or boost energy efficiency. In October 2021, the Bank Ochrony rodowiska, a Polish bank that specializes in funding environmental protection initiatives received €75 million from the European Investment Bank (EIB) for these small enterprises. The Polish bank wants to use at least 50% of the loan for initiatives with a clear emphasis on tackling climate change, such improving building energy efficiency or turning to renewable energy sources like solar power. The money is set to be distributed across Poland, with around 80% of it projected to go to cohesive regions. Very small companies are called in the UK micro entities, which have simpler financial reporting requirements. Such micro enterprises must meet any two of the following criteria: balance sheet £316,000 or less; turnover £632,000 or less; employees 10 or less. Many small and medium sized businesses form part of the UK's currently growing Mittelstand, or Brittelstand'' as it is also sometimes named. These are businesses in Britain that are not only small or medium but also have a much broader set of values and more elastic definition. The Department for Business Innovation and Skills estimated that at the start of 2014, 99.3% of UK private sector businesses were SMEs, with their £1.6 trillion annual turnover accounting for 47% of private sector turnover. In order to support SMEs, the UK government set a target in 2010 "that 25% of government’s spend, either directly or in supply chains, goes to SMEs by 2015"; it achieved this by 2013.
Small and medium sized enterprises (SMEs) or small and medium sized businesses (SMBs) are businesses whose personnel and revenue numbers fall below certain limits. The abbreviation "SME" is used by international organizations such as the World Bank, the OECD, European Union, the United Nations, and the World Trade Organization (WTO). In any given national economy, SMEs sometimes outnumber large companies by a wide margin and also employ many more people. For example, Australian SMEs makeup 98% of all Australian businesses, produce one third of the total GDP (gross domestic product) and employ 4.7 million people. In Chile, in the commercial year 2014, 98.5% of the firms were classified as SMEs. In Tunisia, the self employed workers alone account for about 28% of the total non farm employment, and firms with fewer than 100 employees account for about 62% of total employment. The United States' SMEs generate half of all U. S. jobs, but only 40% of GDP. Developing countries tend to have a larger share of small and medium sized enterprises. Although they create more new jobs than large firms, SMEs also suffer the majority of job destruction/contraction. According to the World Bank Group's 2021 FINDEX database, there is a $1.7 trillion funding gap for formal, women owned micro, small, and medium sized enterprises. Additionally, over 68% of small women owned firms lack access to finance.' Overview
SMEs are important for economic and social reasons, given the sector's role in employment. Due to their sizes, SMEs are heavily influenced by their Chief Executive Officer, a. k. a. CEOs. The CEOs of SMEs are often the founders, owners, and managers of the SMEs. The duties of the CEO in a SME mirror those of the CEO of a large company: the CEO needs to strategically allocate their time, energy, and assets to direct the SMEs. Typically, the CEO is the strategist, champion and leader for developing the SME or the prime reason for the business failing. At the employee level, Petrakis and Kostis (2012) explore the role of interpersonal trust and knowledge in the number of small and medium enterprises. They conclude that knowledge positively affects the number of SMEs, which in turn positively affects interpersonal trust. Note that the empirical results indicate that interpersonal trust does not affect the number of SMEs. Therefore, although knowledge development can reinforce SMEs, trust becomes widespread in a society when the number of SMEs is greater. Legal boundary on SMEs around the world
Multilateral organizations have been criticized for using one measure for all. The legal boundary of SMEs around the world vary, and below is a list of the upper limits of SMEs in some countries. Africa
African small businesses frequently struggle to get the cash they require to thrive. According to the SME Finance Forum, the formal financing gap for African SMEs averaged 17% of GDP across the 43 countries assessed in 2017. According to the World Bank, women own 58% of all MSMEs in Africa. The European Investment Bank's Banking in Africa survey, 2021 suggests that most of the responding banks had a non performing loan (NPL) ratio of at least 5%. NPLs account for at least 10% of the SME portfolio in approximately one third of African banks. Furthermore, 50% of the banks had at least 5% of their SME portfolio under the moratorium, and 40% had at least 5% of SME loans under some type of restructuring. Somalia
In Somalia, the term is SME (for "small, medium, and micro enterprises"); elsewhere in Africa, MSME stands for "micro, small, and medium enterprises". An SME is defined as a small business that has more than 30 employees but less than 250 employees. South Africa
In the National Small Business Amendment Act 2004, micro businesses in the different sectors, varying from the manufacturing to the retail sectors, are defined as businesses with five or fewer employees and a turnover of up to R100,000 ZAR ($6,900). Very small businesses employ between 6 and 20 employees, while small businesses employ between 21 and 50 employees. The upper limit for turnover in a small business varies from R1 million ($69,200) in the agricultural sector to R13 million ($899,800) in the catering, accommodations and other trade sectors as well as in the manufacturing sector, with a maximum of R32 million ($2,214,800) in the wholesale trade sector. Medium sized businesses''' usually employ up to 200 people (100 in the agricultural sector), and the maximum turnover varies from R5 million ($346,100) in the agricultural sector to R51 ($3,529,800) million in the manufacturing sector and R64 ($4,429,600) million in the wholesale trade, commercial agents and allied services sector. A comprehensive definition of an SME in South Africa is, therefore, an enterprise with one or more of the following characteristics:
Fewer than 200 employees,
Annual turnover of less than R64 million,
Capital assets of less than R10 million,
Direct managerial involvement by owners
Asia
SMEs account for nearly 90% of all company entities in developing Asian countries and are the principal private sector employers, supplying 50 80% of all jobs. SMEs cover 97 99% of all firms in South east Asia, contributing considerably to each country's GDP—for example, 46% in Singapore, 57% in Indonesia, and over 40% in other nations. 98% of business establishments in Hong Kong are defined as SMEs and employed 45% of the work force. India
India defines Micro, Small and Medium Enterprises based on dual criteria of investment and turnover. This definition is provided in Section 7 of Micro, Small & Medium Enterprises Development Act, 2006 (MSMED Act) and was notified in September 2006. The Act provides for the classification of enterprises based on their investment size and the nature of the activity undertaken by that enterprise. As per MSMED Act, enterprises are classified into two categories manufacturing enterprises and service enterprises. For each of these categories, a definition is given to explain what constitutes a micro enterprise or a small enterprise or a medium enterprise. If an enterprise does not fall under the above categories, it would be considered a large scale enterprise. In June 2020, India updated the definition as follows:
+Sr NoClassificationCriteria (in ₹)1Micro EnterprisesInvestment <= 1 cr and Turnover <= 5 cr2Small EnterprisesInvestment <= 10 cr and Turnover <= 50 cr3Medium EnterprisesInvestment <= 50 cr and Turnover <= 250 cr
Businesses that are declared as MSMEs and within specific sectors and criteria can then apply for "priority sector" lending to help with business expenses; banks have annual targets set by the Prime Minister's Task Force on MSMEs for year on year increases of lending to various categories of MSMEs. MSME is considered a key contributor to India's growth and contributes 48% to India's total export. Indonesia
In Indonesia, the government defines micro, small, and medium enterprises (Indonesian: usaha mikro kecil menengah, UMKM) based on their assets and revenues according to Law No. 20/2008:
Type Maximum assets, Rp Gross Revenue, Rp Number of Employee Statistics Indonesia Micro maximum 50,000,000 maximum 300,000,000 1 4 Small 50,000,000 500,000,000 300,000,000 2,500,000,000 5 9 Medium 500,000,000 10,000,000,000 2,500,000,000 50,000,000,000 20 99 Large >10,000,000,000 >50,000,000,000 >99
An annual revenue of Rp 50 billion is approximately equal to US$3.1 million as of April 2024. Despite their significant contribution to GDP and job creation, Indonesian MSMEs confront a number of obstacles. One of the most significant is capital access: 60 70 percent of MSMEs lack access to financial institutions and their funding options. Other restrictions include inadequate infrastructure, difficulties acquiring company licences and permissions, high tax rates, political insecurity, and improving their brand image in the digital era. 21st century businesses strategically use both their websites and social media in order to advertise their products and control their branding. Quality content on both information streams will positively affect branding and attract customers. The People's Business Credit (Kredit Usaha Rakyat, or KUR [id]) was established in 2007 by President Yudhoyono to extend credit to businesses that were considered "feasible but not bankable". Bank Rakyat Indonesia conducts more than half of KUR lending nationwide. In Jakarta, the capital city of Indonesia, 529 MSMEs with the potential to be funded have been identified by Bank Indonesia. Economy Sector Number of Companies Processing Industry 151 Health Services and Social Activities 1 Rental leasing services without option rights, employment, travel agents and other business support 9 Professional, Scientific And Technical Services 11 Other Service Activities 21 Arts, Entertainment And Recreation 1 Construction 2 Water Procurement, Waste Management And Recycling, Waste And Garbage Disposal And Cleaning 1 Provision of Accommodation and Provision of Food and Drink 80 Wholesale and retail trade of car and motorcycle repair and maintenance 236 Agriculture, Forestry, and Fisheries 16
Philippines
According to the Department of Trade and Industry's 2020 List of Establishments report, there are 957,620 registered business enterprises operating in the country, composed of 99.51% MSMEs and 0.49% large firms. The MSMEs consist of 88.77% microenterprises, 10.25% small enterprises, and 0.49% medium enterprises. Among the top industry sectors include (1) wholesale and retail trade; repair of motor vehicles and motorcycles (445,386); (2) accommodation and food service activities (134,046); (3) manufacturing (110,916); (4) other service activities (62,376); and (5) financial and insurance activities (45,558) which accounted for about 83.77% of the total number of MSME establishments. Prior to the pandemic, MSMEs generated more than 5.38 million jobs or 62.66% of the country's total employment with a 29.38% share from micro enterprises followed by 25.78% and 7.50% for small and medium enterprises. Europe
European Union
Small companies are important to the European economy as they account for 99.8% of non financial enterprises in the European Union (EU) and employ two thirds of the workforce in the EU. The majority of European firms are small and medium sized enterprises (SMEs), employing over 100 million people. Due to the COVID 19 pandemic, a large majority of SMEs saw a decline in revenue during 2020 2021. Medium sized businesses (or mid caps) play an important role in the European economy, accounting for a considerable part of employment and wealth production. According to a recent European Commission analysis, mid cap companies (250 3000 people) make up about 17% of total employment and 21% of turnover in the EU27 business sector. Micro firms (with fewer than nine employees) employ 38% of the total workforce, while SMEs with fewer than 250 employees account for 34.4%. Larger (XL) firms with 3,000 or more employees account for 10.1% of overall employment in EU business sectors. According to Eurostat SBS statistics, in 2021, tiny enterprises (0 9 workers) and SMEs (excluding micro firms) employed around 30% and 34.5% of the entire workforce in EU27 business sectors, while bigger firms (250+ employees) contributed for 36.4% of overall employment. The pandemic has had a greater impact on SMEs than on large businesses, with an average sales loss of 26% versus 23% for large businesses. Government assistance appears to have benefited SMEs more than large corporations among the companies that do have overdraft facilities, indicating a successful application of policies to ease financial limitations for SMEs even when they receive help from the banking sector. The EIB Group contributed more than €16.35 billion to small and medium sized firms in 2022. SMEs were more quick in altering output during the pandemic, despite the intensity of the shock. In reaction to the crisis, one third of major enterprises altered their output or services, compared to 37% of SMEs. The criteria for defining the size of a business differ from country to country, with many countries having programs of business rate reduction and financial subsidy for SMEs. According to the European Commission, SMEs are enterprises which meet the following definition of staff headcount and either the turnover or balance sheet total definitions:
Company category Staff headcount Turnover Balance sheet total Medium sized < 250 ≤ €50 million ≤ €43 million Small < 50 ≤ €10 million ≤ €10 million Micro < 10 ≤ €2 million ≤ €2 million
In July 2011, the European Commission said it would open a consultation on the definition of SMEs in 2012. A consultation document was issued on 6 February 2018 and the consultation period closed on 6 May 2018. as of November 2019, no conclusions or responses have yet emerged. In Europe, there are three broad parameters that define SMEs:
Micro enterprises have up to 10 employees
Small enterprises have up to 50 employees
Medium sized enterprises have up to 250 employees. The European definition of SME follows: "The category of micro, small and medium sized enterprises (SMEs) is made up of enterprises which employ fewer than 250 persons and which have an annual turnover not exceeding 50 million euro, and/or an annual balance sheet total not exceeding 43 million euro." In order to prepare for an evaluation and revision of some features of the small and medium sized enterprises definition European Union established public consultation period from 6 February 2018 to 6 May 2018. Public consultation is available for all EU member country citizens and organizations. Especially, national and regional authorities, enterprises, business associations or organizations, venture capital providers, research and academic institutions, and individual citizens are expected as the main contributors. EU member states have had individual definitions of what constitutes an SME. For example, the definition in Germany had a limit of 255 employees, while in Belgium it could have been 100. The result is that while a Belgian business of 249 employees would be taxed at full rate in Belgium, it would nevertheless be eligible for SME subsidy under a European labelled programme. SMEs are a crucial element in the supplier network of large enterprises which are already on their way towards Industry 4.0. According to German economist Hans Heinrich Bass, "empirical research on SME as well as policies to promote SME have a long tradition in [West] Germany, dating back into the 19th century. Until the mid 20th century, most researchers considered SME as an impediment to further economic development and SME policies were thus designed in the framework of social policies. Only the Ordoliberalism school, the founding fathers of Germany's social market economy, discovered their strengths, considered SME as a solution to mid 20th century economic problems (mass unemployment, abuse of economic power), and laid the foundations for non selective (functional) industrial policies to promote SMEs." Only around 20% of European SMEs are substantially digitalized, compared to almost 50% of major businesses. Small and medium sized companies make up 56.2% of the non financial sector. Smaller companies account for more than 60% of the value contributed to the non financial sector in Belgium, Italy, and Spain, three of the nations worst hit by the COVID 19 pandemic. An estimated 50% of Europe's small firms may fail because they lack the substantial financial reserves required to weather the crisis. With around 338,000 functioning in Bulgaria in 2022, SMEs and mid caps are major contributors in the Bulgarian economy. They also employ over 75% of the workforce and create 65% of the economy's added value. The results of an EU survey conducted in 2021 suggest that during the pandemic, in countries with larger fiscal packages, SMEs were on average more likely to experience bankruptcy even after controlling for the size of the shock, the use of bank financing, and country and sector fixed effects. When policy assistance rises by 1% of GDP, the probabilities of bankruptcy for a SME are 2.7 times higher than for a non SME. Credit limitations are especially difficult for SMEs and new businesses to overcome. Credit constraints affect 24% of SMEs and 27% of young businesses. Poland
The SME sector in Poland generates almost 50% of the GDP, and out of that, for instance, in 2011, micro companies generated 29.6%, small companies 7.7%, and medium companies 10.4% (big companies 24.0%; other entities 16.5%, and revenues from customs duties and taxes generated 11.9%). In 2011, out of the total of 1,784,603 entities operating in Poland, merely 3,189 were classified as "large", so 1,781,414 were micro, small, or medium. SMEs employed 6.3 million people out of the total of 9.0 million of labour employed in the private sector. In Poland in 2011 there were 36.2 SMEs per 1,000 inhabitants. Nearly seven million people are employed by small businesses in Poland, which accounts for around half of the country's GDP, yet smaller businesses are less likely than larger ones to invest in strategies to combat climate change or boost energy efficiency. In October 2021, the Bank Ochrony rodowiska, a Polish bank that specializes in funding environmental protection initiatives received €75 million from the European Investment Bank (EIB) for these small enterprises. The Polish bank wants to use at least 50% of the loan for initiatives with a clear emphasis on tackling climate change, such improving building energy efficiency or turning to renewable energy sources like solar power. The money is set to be distributed across Poland, with around 80% of it projected to go to cohesive regions. Very small companies are called in the UK micro entities, which have simpler financial reporting requirements. Such micro enterprises must meet any two of the following criteria: balance sheet £316,000 or less; turnover £632,000 or less; employees 10 or less. Many small and medium sized businesses form part of the UK's currently growing Mittelstand, or Brittelstand'' as it is also sometimes named. These are businesses in Britain that are not only small or medium but also have a much broader set of values and more elastic definition. The Department for Business Innovation and Skills estimated that at the start of 2014, 99.3% of UK private sector businesses were SMEs, with their £1.6 trillion annual turnover accounting for 47% of private sector turnover. In order to support SMEs, the UK government set a target in 2010 "that 25% of government’s spend, either directly or in supply chains, goes to SMEs by 2015"; it achieved this by 2013.
Норвегия
В Норвегии принято относить малые и средние предприятия к организациям с численностью персонала менее 100 человек. Предприятия с 1–20 сотрудниками определяются как малые, а предприятия с 21–100 сотрудниками – как средние. Организации с более чем 100 сотрудниками считаются крупными предприятиями. Термин "микропредприятия" в Норвегии используется редко. НХО
In Norway it is normal to design small and medium sized businesses as businesses with less than 100 employees. Businesses with 1 20 employees are defined as small, while businesses with 21 100 employees are considered medium sized. Businesses with more than 100 employees would be considered a big business. Micro sized businesses is a little used expression in Norway. NHO
Малые и средние предприятия составляют более 99% всех предприятий в Норвегии и в совокупности обеспечивают занятость 47% всех работников частного сектора. Вклад МСП в экономическую добавленную стоимость составляет 44% – почти 700 миллиардов норвежских крон (NOK) в год. Факты о малых и средних предприятиях (МСП)
Small and medium sized businesses make up more than 99% of all businsesses in Norway, and together they employ 47% of all employees in the private sector. Together, SMEs account for 44% of the economic value added each year almost 700 billion Norwegian Kroners (NOK). Fakta om små og mellomstore bedrifter (SMB)
Швейцария
В Швейцарии Федеральное статистическое управление определяет малые и средние предприятия как компании с численностью менее 250 сотрудников. Категории следующие: По оценкам, в течение следующего десятилетия на продажу будет выставлено почти 2 триллиона долларов канадских МСП, что вдвое превышает активы 1000 крупнейших канадских пенсионных фондов и приблизительно соответствует годовому ВВП Канады.
In Switzerland, the Federal Statistical Office defines small and medium sized enterprises as companies with less than 250 employees. The categories are the following: It has been estimated that almost $2 trillion of Canadian SMEs will be coming up for sale over the next decade, which is twice as large as the assets of the top 1,000 Canadian pension plans and approximately the same size as Canadian annual GDP.
Соединенные Штаты
В Соединенных Штатах Администрация малого бизнеса определяет критерии для малого бизнеса, исходя из отрасли, структуры собственности, выручки и численности персонала (которая в некоторых случаях может достигать 1500, хотя обычно лимит составляет 500). И в США, и в ЕС обычно используется один и тот же порог – менее 10 сотрудников – для малых офисов (SOHO).
In the United States, the Small Business Administration sets small business criteria based on industry, ownership structure, revenue and number of employees (which in some circumstances may be as high as 1500, although the cap is typically 500). Both the US and the EU generally use the same threshold of fewer than 10 employees for small offices (SOHO).
Австралия
В Австралии малым и средним предприятием (МСП) считается предприятие с 200 или менее сотрудниками. Микропредприятия насчитывают от 1 до 4 сотрудников, малые предприятия – от 5 до 19, средние предприятия – от 20 до 199, а крупные предприятия – 200 и более. Австралийские МСП составляют 98% всех австралийских предприятий, производят треть ВВП и обеспечивают занятость 4,7 миллиона человек. МСП обеспечивают 90% всего экспорта товаров и более 60% экспорта услуг.
In Australia, a SME has 200 or fewer employees. Micro Businesses have 1–4 employees, small businesses 5–19, medium businesses 20–199, and large businesses 200+. Australian SMEs make up 98% of all Australian businesses, produce one third of total GDP, and employ 4.7 million people. SMEs represent 90 percent of all goods exporters and over 60% of services exporters.
Новая Зеландия
В Новой Зеландии 99% предприятий насчитывают 50 или меньше сотрудников, а официальное определение малого бизнеса – предприятие с 19 или менее работниками. По оценкам, примерно 28% валового внутреннего продукта Новой Зеландии создается компаниями с численностью персонала менее 20 человек.
In New Zealand, 99% of businesses employ 50 or less staff, and the official definition of a small business is one with 19 or fewer employees. It is estimated that approximately 28% of New Zealand's gross domestic product is produced by companies with fewer than 20 employees.