Question ID:
Legal Act:
Regulation (EU) No 575/2013 (CRR)
Credit risk
COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations:
Not applicable
Article 501
Disclose name of institution / entity:
Name of institution / submitter:
Building Societies Association
Country of incorporation / residence:
United Kingdon
Type of submitter:
Industry association
Subject Matter:
Definition of SME

SMEs are defined by turnover alone (EUR 50 million according to OJ L 124, 20.05.2003). Our question concerns when turnover is recorded. Is it (i) at inception of the loan or (ii) on an on-going basis? We would also like to know what level of documentation/proof is required, if any.

Background on the question:

Not all of our members, particularly smaller ones, hold turnover data on their systems so will have no actual "proof". It would be disproportionately burdensome for them to start collecting this data, particularly if it had to be monitored. But it would be relatively straightforward for them to determine what percentage of their loan book would never exceed the SME turnover threshold either at inception or during the life of the loan.

Date of submission:
Published as Final Q&A:
Final Answer:

Under Article 501(2)(b) of Regulation (EU) No. 575/2013 (CRR) an SME is defined in accordance with Commission Recommendation 2003/361/EC of 6 May 2003 concerning the definition of micro, small and medium sized enterprises. A deviation results only to the extent that, among the criteria listed in Article 2 of the Annex to that Recommendation, only the annual turnover shall be taken into account.

Since the possible relief in capital requirements under Article 501 of the CRR is limited to exposures to SMEs, it needs to be ensured that this privilege is not extended inappropriately. An institution therefore needs to have adequate current information available on an on-going basis and should be able to adequately demonstrate the fulfilment of this requirement to its competent authorities.

Final Q&A
Answer prepared by:
Answer prepared by the EBA.
Note to Q&A:

Update 26.03.2021: This Q&A has not yet been reviewed by the EBA in the light of the changes introduced to Regulation (EU) No 575/2013 (CRR).

Update 28.10.2021: This Q&A has been reviewed in the light of the changes introduced to Regulation (EU) No 575/2013 (CRR) and continues to be relevant.