SBA to Take Public Testimony on Proposed Small-Business Size Standards

The Small Business Administration will take public testimony Thursday, September 17, on a proposed overhaul of the standards used to determine which firms qualify as small businesses for federal programs and contracting.

The agency announced the forum on September 11. Pre-registration is required, and participants must indicate whether they want to testify. SBA says it may impose time limits if registration is high, and testimony will be considered alongside written comments as the agency develops a final rule.

The proposal is not final. Existing size standards remain in effect unless and until SBA adopts a final rule and it takes effect.

What the proposal would change

The proposed rule would establish size standards for 338 broader industry groups and industries, down from a current framework of nearly 1,000 standards. The proposal would use 276 four-digit NAICS industry groups and 62 five-digit industries, according to the Federal Register notice.

The methodology would also change how SBA evaluates the markets in which firms compete. It would consider factors including national industry size, the number of geographic markets, net imports, industry structure, competition, inflation and productivity. The proposal would add a productivity adjustment to receipt-based standards and would move numerous industries toward employee-based standards, although some standards would remain based on receipts or assets.

Size standards vary by industry. They generally use employee counts or average annual receipts, rather than one national cutoff for every small business. Businesses must also account for affiliates when determining whether they meet applicable federal size requirements.

Which businesses could be affected

If adopted, the changes could affect firms seeking federal small-business set-aside contracts, SBA-backed loans and guarantees, certifications and other programs that use SBA size standards. They could also change the pool of companies competing in parts of the federal contracting marketplace.

SBA estimates that more than 110,000 additional employer firms could qualify as small businesses under the proposal. That is an agency projection, not a final or independently verified count. The actual effect would depend on the final standards, each firm’s industry classification and the rule’s implementation.

The agency says its proposed approach is intended to simplify classification and allow some growing firms to remain eligible longer. That expected effect remains subject to public comment and any revisions SBA makes before issuing a final rule.

Deadlines for businesses

The oral testimony session is scheduled for September 17. Written comments on the revised methodology are due Monday, September 21, under Federal Register docket SBA-2026-0265. Comments on the proposed size-standards rule use RIN 3245-AI67 and Docket No. SBA-2026-0199; SBA’s September 11 announcement directs participants to submit them through Regulations.gov or by mail.

Businesses that sell to the federal government or rely on SBA programs may want to review their North American Industry Classification System, or NAICS, assignments and current size-standard status. Firms near an employee or revenue threshold may also want to compare their circumstances with the proposed standards before submitting comments.

Active federal contractors and businesses that provide access to capital are among the participants SBA specifically encouraged to join the testimony process. Pre-registration is required for the September 17 forum.

What happens next

After reviewing the oral testimony and written comments, SBA will decide whether to issue a final rule and whether to modify the proposal. Until a final rule is adopted and becomes effective, the existing standards continue to govern eligibility.

Businesses should monitor SBA and Federal Register updates for a final rule, an effective date and implementation instructions.

Sources

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