SME (Small and Medium Enterprise)
A business classification for small and medium enterprises, defined by employee count and turnover thresholds.
SME stands for Small and Medium Enterprise. In the UK and EU, the official definition uses three criteria: employee headcount, annual turnover, and balance sheet total. A micro-enterprise has fewer than 10 employees and under £2 million turnover. A small enterprise has fewer than 50 employees and under £10 million turnover. A medium enterprise has fewer than 250 employees and under £50 million turnover.
SME classification is relevant to business finance because many government-backed schemes (such as the Growth Guarantee Scheme) and specialist lender products are specifically targeted at SMEs. Some regulatory protections under the Financial Services and Markets Act also apply differently to SMEs borrowing under certain thresholds.
The UK is home to approximately 5.5 million SMEs, which account for 99.9% of all businesses and employ around 60% of the private sector workforce. SME finance is the core market for Spark Finance.
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