SBA Rewrites Rules on What Counts as Small Business Magic
Published Date: 8/20/2026
Proposed Rule
Summary
The Small Business Administration (SBA) updated how it decides what counts as a 'small business' to make sure the rules are fair and clear. This affects small businesses across the country by potentially changing who qualifies for special programs and contracts. The SBA wants your thoughts on these changes by September 21, 2026, so get ready to share your feedback!
Analyzed Economic Effects
5 provisions identified: 2 benefits, 0 costs, 3 mixed.
Table of Size Standards Shrinks to 338
SBA proposes to cut its table of size standards from 995 entries to 338 entries: 276 size standards at the 4-digit NAICS Industry Group level and 62 size standards at the 5-digit level. SBA says this consolidation will make it easier for small businesses to find the correct size standard for contracting and other programs and gives the example that some restaurant NAICS distinctions currently mean very different receipts thresholds (e.g., $34 million vs. $11.5 million).
Shift Toward Employment-Based Standards
SBA proposes to prefer employment-based size standards for most industries to reduce year-to-year changes in small/large status. For all but one industry (Fishing, NAICS 1141), SBA proposes employment-based standards because employment is less volatile than receipts.
Receipt Standards May Be Adjusted for Productivity
SBA proposes to begin adjusting receipt-based size standards for productivity growth and says it may make such adjustments between the five-year statutory reviews. SBA also continues to adjust receipt-based standards for inflation (most recently adjusted on November 17, 2022).
SBA Generally Won’t Lower Size Standards
SBA states it generally chose not to decrease size standards when the methodology would support a decrease, except when a nationally dominant firm would be classified as small. That policy aims to avoid removing benefits from firms currently treated as small.
New Market-Structure Factors in Setting Standards
SBA will set size standards using industry structure measures called average market size, which includes (1) the national industry size, (2) the number of distinct geographic markets where competition occurs, and (3) an adjustment for imports and exports. SBA says industries with smaller average market sizes get smaller size standards and vice versa.
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Key Dates
Department and Agencies
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