What is an SME?

Considering it is thought that around 99% of all companies within the European Union are small and medium-sized enterprises, if you are looking to form a business – or have just started your own company – it is best to understand what SMEs are. Here at Smarta, you can use our formations tool to incorporate your own limited company, if you haven’t done so already.

Generally, the UK government follow the EU’s definition of SMEs, and to qualify as an SME, your company must fit two criteria: staff headcount of between one and 250, and an annual turnover of no more than €50 million (approximately £45 million). You can use the SME self-assessment questionnaire, produced by the European commission, to see if your business meets these standards.[1]

In terms of SMEs, there are three different types:

  1. Micro: if your small business has fewer than 10 staff and a turnover of less than or equal to €2 million a year, then you are known as a micro enterprise.
  1. Small: on the other hand, if more than nine but fewer than 50 people work at your company, which also has a turnover of €10 million or less, then said business is a small enterprise.
  1. Medium: finally, if you employ fewer than 250 people but more than 49, and your business has a turnover of €50 million or less, then you are a part of a medium enterprise.

Note that HMRC have a separate definition for SMEs, that is companies with no more than 500 employees, and with an annual turnover no greater than £100 million.

If your company comes under the SME bracket then – while Britain is still a member of the EU – can apply for funds or an investment for your business, directly from the Executive Agency for SMEs (EASME) in what is known as the Horizon 2020 scheme[2]. There are three stages to the application process, which see you winning a €2.5 million investment:

Phase 1: Concept and Feasibility Assessment

For the start of the application process, you will have to draft a business proposal, which will be assessed, by the EASME, to determine whether your business concept is feasible and innovative. In six months, you can turn your idea into your company with the help of a €50,000 grant from the EU.

Phase 2: Demonstration, Market Replication, R&D

If your business makes it this far then between €500,000 and €2.5 million is up for grabs, directly funded by the EU. This phase will take between one-to-two years, as it will evaluate how your business matures over time and whether it is scalable.

Phase 3: Business acceleration and support services

Upon reaching the third, and final phase of this funding scheme, the EASME will set out to help accelerate the growth of your SME, including providing training and business facilities, however, no additional funding is providing now

Smarta Formations

Your business journey starts here! 

Smarta Formations is the starting point for any budding entrepreneur wanting to legally register their business and start trading. Use our Company name checker to see if your preferred business name is available, and then simply register in 3 simple steps online (within minutes); applications take up to 24 hours to complete (or 3 hours if you choose our express service).


[1] http://ec.europa.eu/growth/tools-databases/SME-Wizard/smeq.do;SME_SESSION_ID=Gm6a44Fy_TqIOktd680MMbc9zBJbduNygNFQZboo6cglHlKfpxcw!103665658?execution=e1s1

[2] https://ec.europa.eu/easme/sites/easme-site/files/smei_2017_final_web.pdf

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