Letter from Shift's CEO
Why Shift publishes the SME Economy Index.
Defining the Australian SME Economy
The term ‘SME’, short for small and medium enterprise, is used widely across official statistics, lenders and commentators, but defined inconsistently. That makes figures about the sector hard to compare from one source to the next. This page sets out the definition the Shift SME Economy Index works to, how the main external sources map onto it, and why that consistency matters.
How big is the SME economy in Australia?
Australia’s SME economy spans every industry. Businesses under the ABS’s threshold for an SME would be the country’s largest industry by a wide margin, on both activity and employment, if they were counted as their own industry.
The SME economy compared with named industries, by gross value added and by employment
GDP Contribution
Employment Contribution
Note: These figures are sized on an employee basis, the only basis the public sources publish. The Shift SME Economy Index measures the SME economy by revenue, so the two are not directly comparable. The mapping between the two is set out below. Source: ASBFEO. SME economy = assumed as businesses with <200 employees.
What is an SME in Australia?
Even when the SME as one entity, definitions vary. Different sources measure the SME economy for different purposes and so draw the boundary in different places: by employees, by revenue, or by no fixed boundary at all. They were not designed to align, so figures drawn from different sources rarely describe the same population.
Among the sources that use revenue, the upper end of the scale ranges from $10m to $75m.
Source | Definition | Measured by |
|---|---|---|
ABS | Employee bands: small 0 to 19, medium 20
to 199 | Employees |
ATO |
Small business at revenue under $10m | Revenue |
RBA |
Revenue under $75m, then split into small and medium by loan exposure rather than revenue | Revenue |
APRA | Follows RBA | Revenue |
Shift’s SME definition: Small, Established and Corporate
The RBA and APRA already draw the SME limit at $75m in annual revenue. Rather than introduce a further definition, the Shift SME Economy Index adopts that established limit and then identifies the segments within it.
Source | Definition (annual revenue) |
|---|---|
Small |
Under $1.5m |
Established | $1.5m to under $10m |
Corporate | $10m to $75m |
Note: Businesses above $75m sit outside the SME universe and are tracked for context only.
How do the ABS, ATO, RBA and APRA define SME?
External sources use different cut-offs. The table below maps them to Shift’s definition so they can be compared.
Source definition | Their cut-off |
Maps to Shift |
|---|---|---|
ABS Small | 0 to 19 employees | Small and part of Established |
ABS Medium | 20 to 199 employees | Part of Established and corporate |
ABS Large | 200+ employees | Outside the SME universe |
APRA SME Retail | Revenue under $75m, exposure under $1.5m | Majority of Shift |
APRA SME Corporate | Revenue under $75m, exposure $1.5m or more | Part of corporate |
RBA Small | Revenue under $75m, exposure under $1.5m | Majority of Shift |
RBA Medium | Revenue under $75m, exposure $1.5m or more | Part of corporate |
ATO Small business | Revenue under $10m | Small and Established |
Note: The $1.5m in the APRA and RBA rows is credit exposure, a loan size, not revenue. It is a different measure from the $1.5m revenue ceiling of the Small segment above.
Sources and methods
The supporting data, references and methodology that sit behind the Shift SME Economy Index are available upon request.
- Learn more →
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Credit landscape
Where SME credit comes from, and where the gaps are.
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Methodology
How the Index is built, and how it's revised over time.