Small and medium-sized enterprises (SMEs) represent the backbone of both the European and Czech economies. Their classification relies on three core criteria: employee headcount, annual turnover, and total balance sheet.

Definition of SMEs

Medium-sized enterprises are defined as entities employing fewer than 250 people, with an annual turnover of up to €50 million or a balance sheet total not exceeding €43 million. Small enterprises have fewer than 50 staff members and an annual turnover or balance sheet total of no more than €10 million. Micro-enterprises, the smallest category, employ fewer than 10 people and achieve a maximum turnover or balance sheet total of €2 million.

The SME definition is particularly crucial for grant policy and for accessing European and national funding programs. The independence criterion also plays a pivotal role—an enterprise majority-owned by a larger parent company may not qualify as an SME, even if it meets the financial and headcount limits. This principle ensures that financial support targets genuinely independent, smaller businesses that frequently face distinct challenges compared to large corporations.

Importance of SMEs

Across the entire European Union, SMEs account for the vast majority of business entities and employ a significant portion of the workforce. Thanks to their agility, they can quickly adapt to market changes, foster innovation, and drive regional economic stability. Consequently, a broad range of support measures targets them—from grant calls to streamlined administrative procedures and specialized financial instruments that ease access to investment.