Benefits and requirements for MSMEs

SMEs in Colombia: Requirements and Benefits

According to the National Administrative Department of Statistics (DANE), micro, small, and medium-sized enterprises (SMEs or MIPYMES in Spanish) represent 35% of Colombia's gross domestic product, generate 80% of employment, and constitute 90% of the productive sector. It's no surprise that the government focuses on their growth and strengthening, as evidenced by Law 590 of 2000 (and its modification, Law 905 of 2004), which define these companies and their benefits. This article explores the requirements for establishing an SME and the benefits they receive. To learn more about the legal aspects of starting a business, you can read about the Legal Requirements to Create a Company in Colombia. If you are interested in the business potential in the country, discover how to Invest in Colombia.

Requirements for Classification as an SME

According to the aforementioned laws and Law 1450 of 2011, two main requirements are necessary for classification as an SME: the value of assets and the number of employees.

Asset Value

The asset value is calculated as the average invoiced value of the last three business exercises or closed fiscal years. If the company does not have this seniority, the available information is considered.

Number of Employees

This requirement considers the number of employees hired during the last three business exercises or closed fiscal years. As with assets, if the company does not have this seniority, the available information is used.

Based on these criteria, a business is classified as:

1. Micro-enterprise: Up to 10 employees and assets less than 500 current monthly legal minimum wages (SMMLV).
2. Small enterprise: Between 11 and 50 employees and assets between 501 and 5,000 SMMLV.
3. Medium-sized enterprise: Between 51 and 200 employees and assets between 5,001 and 30,000 SMMLV.

A very popular legal form for SMEs in Colombia is the Simplified Stock Company (Sociedad por Acciones Simplificadas - S.A.S.).

Benefits of SMEs

To help improve these companies, the Colombian government offers a series of benefits. These benefits are framed within Corporate Law.

Credit Lines and Financing

Several government entities and funds facilitate financing and improve the productivity of SMEs. These include:

• Bancóldex, the Development Bank of the Colombian Government.
• FOMIPYME, Fund for the Development and Modernization of SMEs.
• Programs such as ACOPI and FINDITER to support business development.

Additionally, private banking entities offer plans and services dedicated to SMEs. You can find more information about Financing for Companies in Colombia.

Guarantees to Access Credit

The National Guarantee Fund allows these businesses to access a percentage of the requested credit, even without meeting all the guarantees required by the entity, facilitating access to the necessary financing. This service is requested from the banking entity.

Support Programs

Various programs offer advice to entrepreneurs who are interested in growing and improving the productivity of their businesses. Some examples are:

• iNNpulsa Colombia, from the Ministry of Commerce, Industry, and Tourism.
• Productive Transformation Program (PTP).
• The More Productivity program.
• Digital SME.

In Summary

In Colombia, there is a focus on strengthening the SME sector, which is crucial for productivity and job creation. Classification as an SME offers significant benefits that facilitate the creation, innovation, and growth of businesses, contributing to a legitimate economic livelihood. If you are thinking about Creating a Company in Colombia or need legal advice, at Servicio Legal we specialize in Corporate Law and can help you resolve your legal matters. Learn more about our Corporate Lawyers in Colombia and Taxes for Companies in Colombia. For more information or advice, contact Servicio Legal.