The new definition is the result of wide-ranging discussions between the Commission, Member States, business organisations and experts as well as two open consultations on the internet.
The changes reflect general economic developments since 1996, and a growing awareness of the specific hurdles confronting SMEs. The new definition is more suited to the different categories of SMEs and takes better account of the various types of relationships between enterprises. It
helps to promote innovation and foster partnerships, while ensuring that only those enterprises which genuinely require support are targeted by public schemes.
To update thresholds
The changes reflect general economic developments since 1996, and a growing awareness of the specific hurdles confronting SMEs. The new definition is more suited to the different categories of SMEs and takes better account of the various types of relationships between enterprises. It
helps to promote innovation and foster partnerships, while ensuring that only those enterprises which genuinely require support are targeted by public schemes.
To update thresholds
Developments in prices and productivity made it necessary to adjust the financial thresholds4.
Their significant increase will allow an important number of enterprises to maintain their SME status and ensure their eligibility for support measures. The staff headcount thresholds remain at their previous levels, since to have raised them would have diluted the measures tailored for SMEs.
To promote micro enterprises
Throughout the Union, more and more micro enterprises are being created. The new definition
takes this development into account by setting financial thresholds for them. This refinement
aims to encourage the adoption of measures addressing the specific problems micro enterprises
face, especially during the start-up phase.
To improve access to capital
Access to capital is a perennial problem SMEs encounter, largely because they are often unable to give the guarantees traditional lenders require. To help tackle this, the new definition facilitates equity financing for SMEs by granting favourable treatment to certain investors, such as regional funds, venture capital companies and business angels5 without the enterprise losing its SME status. The same applies to small local autonomous authorities with an annual budget of less than 10 million euro and fewer than 5,000 inhabitants. They can invest in an SME up to a certain percentage without the enterprise concerned being at a disadvantage when applying for grants.
To promote innovation and improve access
to Research & Development (R&D) Specific provisions now apply to universities and non-profit research centres enabling them to have a financial stake in an SME. This cooperation will benefit both parties. It strengthens an enterprise by giving it a worthwhile financial partner and access to R&D. It also offers universities and research centres a route for the practical application of their innovative work.
To take account of different relationships between enterprises
One of the main objectives of the new definition is to ensure that support measures are granted only to those enterprises which genuinely need them. For this reason, it introduces methods to calculate the staff and financial thresholds to gain a more realistic picture of the economic situation of an enterprise. To this end, a distinction has been introduced between different types of enterprises: autonomous, partner and linked. The new definition also contains safeguards to prevent abuses of SME status. Clear instructions are given on how to treat particular relationships between an SME and other enterprises or investors when calculating the enterprise’s financial and staff figures. In essence, the new definition takes into account an SME’s ability to call on outside finance. For example, enterprises which are linked to others with large financial resources could come above the ceilings and would not qualify for SME status.
Their significant increase will allow an important number of enterprises to maintain their SME status and ensure their eligibility for support measures. The staff headcount thresholds remain at their previous levels, since to have raised them would have diluted the measures tailored for SMEs.
To promote micro enterprises
Throughout the Union, more and more micro enterprises are being created. The new definition
takes this development into account by setting financial thresholds for them. This refinement
aims to encourage the adoption of measures addressing the specific problems micro enterprises
face, especially during the start-up phase.
To improve access to capital
Access to capital is a perennial problem SMEs encounter, largely because they are often unable to give the guarantees traditional lenders require. To help tackle this, the new definition facilitates equity financing for SMEs by granting favourable treatment to certain investors, such as regional funds, venture capital companies and business angels5 without the enterprise losing its SME status. The same applies to small local autonomous authorities with an annual budget of less than 10 million euro and fewer than 5,000 inhabitants. They can invest in an SME up to a certain percentage without the enterprise concerned being at a disadvantage when applying for grants.
To promote innovation and improve access
to Research & Development (R&D) Specific provisions now apply to universities and non-profit research centres enabling them to have a financial stake in an SME. This cooperation will benefit both parties. It strengthens an enterprise by giving it a worthwhile financial partner and access to R&D. It also offers universities and research centres a route for the practical application of their innovative work.
To take account of different relationships between enterprises
One of the main objectives of the new definition is to ensure that support measures are granted only to those enterprises which genuinely need them. For this reason, it introduces methods to calculate the staff and financial thresholds to gain a more realistic picture of the economic situation of an enterprise. To this end, a distinction has been introduced between different types of enterprises: autonomous, partner and linked. The new definition also contains safeguards to prevent abuses of SME status. Clear instructions are given on how to treat particular relationships between an SME and other enterprises or investors when calculating the enterprise’s financial and staff figures. In essence, the new definition takes into account an SME’s ability to call on outside finance. For example, enterprises which are linked to others with large financial resources could come above the ceilings and would not qualify for SME status.
