Here’s a summary of the key points regarding the proposed changes to the SBA’s small business size standards:
Overview of Proposed Changes
The U.S. Small Business Administration (SBA) recently announced two proposed rules aimed at changing the definition and criteria for small businesses. These rules are:
- Small Business Size Standards: Proposes new size standards for 338 industry groups.
- Revised Size Standards Methodology: Aims to modify how size standards are calculated.
Key Changes in Proposed SBA Size Standards
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Expanded Eligibility: The proposed rule would increase the thresholds for small business status, potentially making over 114,541 firms newly eligible.
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Simplified Structure: The number of individual size standards would decrease from about 1,000 to 338, with classifications at the four- and five-digit NAICS levels.
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Shift to Employee-Based Measures: Many industries would transition from revenue-based measures to employee-based measures, affecting how firms calculate size and identify competitors.
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Streamlined Methodology: The methodology for calculating size standards would reduce from seven to three factors: national industry size, number of geographic markets, and an adjustment for net imports.
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Productivity Adjustment: A new productivity adjustment would be added to revenue-based standards, aligning them more closely with employee-based standards.
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No Reductions: The proposed rules would not lower any industry size standards, acknowledging the hardships faced by small businesses from 2021 to 2024.
Reactions and Feedback
The SBA Office of Advocacy expressed general support but raised concerns about the scale of eligibility changes, indicating that only 4,000 to 6,000 current small contractors might gain small business status, contrary to the SBA’s broader estimates.
Public Engagement
By the original September 21, 2026 deadline, the SBA had received over 2,100 comments, largely opposing the proposals. Given these concerns, the SBA has extended the comment period to November 20, 2026.
Recommendations
Businesses affected by these changes should evaluate how the proposals impact their eligibility and that of their competitors, and consider providing feedback before the new comment deadline.
This summary provides an overview of the proposed changes to small business classification and highlights the actions businesses should consider taking.
