University of Miami International and Comparative Law Review


United States, small businesses account for 99.7% of all employers, and about 47.3% of private sector employment.1 In the European Union (EU) non-financial business sector, SMEs accounted for 99.8% of all enterprises.2 These enterprises employed almost ninety-eight million people—66.6% of total employment—in the EU.

SMEs are variously defined. In the United States, until recently the definition of an SME was an enterprise that employed less than 500 individuals.4 In the EU, SMEs are defined as businesses which employ less than 250 staff and have an annual turnover of less than €50 million, or whose balance sheet total is less than €43 million.

This paper focuses on the smaller end of this scale: the micro SMEs. In the EU, a micro SME has ten or fewer employees, and either less than €2 million in turnover, or fewer than €2 million in assets on their balance sheet.6 Almost all SMEs (93%) in the EU are micro SMEs.

The number is similar in the US. If sole proprietors (technically not employees) are added in, the percentage of firms with no more than 20 employees rises to 98%.8The point is that the bulk of all businesses are small. The question this paper asks is whether small businesses are more financially fragile and prone to failure than larger businesses, and if so, if there is any workable legislative response.