Brussels – Ahead of the anticipated approval of the 'SMALL MIDCAP OMNIBUS' legislative package, the European Union of Crafts and Small Enterprises (SMEUNITED) has voiced significant concerns regarding the introduction of a new enterprise category termed 'small midcaps,' which would encompass companies with up to 750 employees.

SMEUNITED's concerns, articulated in a communication to the EU Commission, highlight the potential side effects this classification may inflict on small and medium-sized enterprises (SMEs) as well as micro-enterprises.

The primary apprehension pertains to access to European Union funds.

SMEUNITED fears the new classification of small midcaps could lead to a dilution of resources that are currently allocated to SMEs.

The association contends that any changes in funding dynamics could adversely affect entrepreneurs' confidence in the European support system, resulting in detrimental impacts on the development of millions of businesses that are highly reliant on such financial assistance.

SMEUNITED emphasizes that the protection of resources earmarked for SMEs must remain a clear and explicit priority during both the current financial period and future multiannual financial frameworks.

Across Europe, there are over 25 million companies, with more than 24 million categorized as micro-enterprises employing fewer than 10 individuals.

Furthermore, there are approximately 1.3 million small businesses and just over 210,000 medium-sized enterprises, contrasted with around 43,000 large companies, of which only a subset will fall under the prospective small midcap classification.

SMEUNITED urges the European Commission to uphold the 'think small first' principle as a guiding philosophy in all forthcoming legislative measures.

The association suggests that the challenge lies in supporting the gradual growth of enterprises while avoiding regulatory burdens that might hinder smaller firms as they exceed the SME threshold.

The proposed creation of an intermediate category could be acceptable, according to SMEUNITED, but it must be designed as a supportive instrument that facilitates business development through proportionate regulatory requirements.

The introduction of the small midcaps is advocated to encompass a limited range of provisions currently reserved for SMEs, with selective applications intended to mitigate regulatory impacts.

SMEUNITED insists that policies should remain centered on micro-enterprises, which frequently face challenges stemming from overly stringent administrative regulations and a bureaucratic landscape that does not adequately differentiate between large industrial firms and small businesses with minimal staff.

To foster a conducive environment for entrepreneurship, SMEs should be provided with clear objectives and the necessary flexibility to meet them in accordance with their unique capabilities, thus avoiding overly prescriptive legislative demands.

The proposed establishment of this new enterprise category should not come at the expense of the most vulnerable companies but instead should facilitate a realistic and supportive growth trajectory for all European businesses.

Finally, SMEUNITED calls upon the Commission to make a strategic decision ensuring that the progression along the entrepreneurial ladder is constructed thoughtfully, preventing the transformation of thresholds into insurmountable barriers.