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The Small Business Administration is considering a broad overhaul of the federal standards that determine when a company qualifies as small. Under the proposed size standards, about 114,541 additional employer businesses would meet that definition, potentially expanding their eligibility for SBA lending programs, small-business federal contracts, and other federal benefits.
The public comment period closed Sept. 21, the same day the SBA held an in-person hearing in Denver. The proposed thresholds do not change current eligibility unless the SBA adopts a final rule and it takes effect. Owners near an existing limit could ultimately face a different threshold, measurement method, or industry classification.
How SBA wants to change small-business eligibility
The SBA estimates the proposal would increase qualifying employer firms from 6,344,967 to 6,459,508, a 1.8% increase. Its companion revised methodology would also add a productivity-growth adjustment for industries measured by annual receipts, on top of the existing inflation adjustment.
The agency would also consolidate its system significantly. Today, it uses 978 size standards built largely around six-digit North American Industry Classification System (NAICS) codes. The proposal would replace them with 338 standards: 276 at the four-digit level and 62 at the five-digit level.
A company operating under a narrow six-digit classification could therefore fall into a broader industry grouping with a different threshold. Some industries would also switch between revenue- and employee-based measurements.
Which industries would see bigger thresholds
Some of the largest proposed increases are in capital-intensive industries. Semiconductor manufacturing would rise from 1,250 to 2,800 employees, while shipbuilding would move from 1,300 to 2,300. Oil drilling would increase from 1,000 to 2,650 employees.
On the revenue side, the threshold for support activities for animal production would climb from $11 million to $71 million, according to the SBA's proposal announcement.
Owners should check the proposal against their own NAICS classification rather than assume a higher headline threshold means their business will qualify. The SBA estimates fewer than 200 firms overall would lose small-business status under the proposed changes.
What the proposal means for federal contractors
Federal contractors could see one of the clearest effects. The SBA estimates that 37,002 firms holding federal contracts in fiscal year 2025 would newly qualify as small businesses. Those companies held about 105,655 contracts worth more than $71 billion.
A larger eligible pool could give growing firms access to small-business set-aside opportunities for longer, but it could also create more competition for contracts already reserved for small businesses. Those concerns surfaced during the Sept. 17 public testimony session, where contractors questioned whether substantially higher limits could put smaller firms against much larger competitors.
Other contracting programs, including 8(a), HUBZone, and veteran-owned programs, have separate qualification requirements beyond meeting an SBA size threshold.
What businesses should check now
Businesses should continue using the current SBA size standards until any final rule takes effect. Owners near an eligibility limit should confirm their existing NAICS code, compare their employee count or annual receipts with the proposed threshold, and check whether their industry would move to a broader classification or a different measurement method.
The close of public comments moves the proposal into the SBA's review process, not into effect. No final implementation date has been announced. Businesses applying for an SBA loan or pursuing a federal set-aside contract should make decisions using the standards in force today while watching for the final rule.