The proposal was published in the Federal Register on August 20, 2026, under RIN 3245-AI67 and Docket No. SBA-2026-0199. It is a proposed rule, not a final regulation, so current size standards remain in effect while the agency takes public comments.

What the SBA would change

The proposal covers 338 industry groups and industries. The current system has 978 size standards based largely on six-digit North American Industry Classification System categories and includes 18 subindustry exceptions.

Under the proposal, SBA would use 276 four-digit and 62 five-digit NAICS standards, remove the exceptions and place receipt-based and employee-based standards in one rule. The agency says the change is intended to make it easier for owners and federal contracting officials to determine which standard applies.

Some industries would shift from average annual receipts to employee counts. SBA also proposes adjusting monetary thresholds for inflation and productivity growth. Its revised methodology would consider national industry size, the number of geographic markets in which firms compete and net imports when estimating average market size.

How many firms could be affected

SBA estimates that the number of eligible small employer firms would rise from 6,344,967 to 6,459,508. That is a net increase of 114,541 firms, or about 1.8% of the employer-firm pool. It should not be confused with broader estimates that count roughly 36 million small businesses using a different definition.

The agency says fewer than 200 firms could lose small-business status under the proposed methodology. SBA also proposes not reducing standards that retain the same measure. After that policy choice, the agency estimates that fewer than five firms in Direct Property and Casualty Insurance Carriers could lose status because of a switch from an employee-based standard to a receipts-based standard.

These are SBA projections, not a guarantee that a particular business will qualify or retain its status. The result for an individual firm would depend on its NAICS classification, ownership and affiliation rules, and whether the applicable standard uses employees, receipts or another measure.

Why the classification matters

Small-business status is used in programs involving SBA-backed financing, federal contracting and regulatory flexibilities. A higher or revised threshold could allow some growing firms to remain eligible for those programs longer.

The proposal could have a notable effect on federal contracting. SBA estimates that 37,002 firms with federal contracts in fiscal year 2025 could become newly eligible as small businesses. Those firms held more than 105,655 contracts worth more than $71 billion, according to the agency’s analysis.

Newly eligible firms could compete for contracts restricted to small businesses, and agencies could count eligible awards toward their small-business contracting goals. But more eligible competitors could also make some set-aside contracts harder to win, particularly for growing firms that already compete near the current thresholds.

The proposal would change one eligibility test; it would not automatically provide a loan, contract or certification. Individual programs can have additional requirements involving ownership, control, socioeconomic status, registration, location or industry-specific eligibility.

For federal contracting, businesses may still need to register in the System for Award Management and complete required representations or certifications. SBA says businesses participating in procurement and some other programs must self-certify their small-business status at least annually.

What owners should do now

Businesses close to an existing SBA size limit can compare their current NAICS classification and standard with the proposed tables. They should not change contracting representations or other official certifications based only on the proposal.

The SBA is accepting comments through September 21, 2026. Businesses and trade groups can submit comments through Regulations.gov or by mail to the agency, identifying RIN 3245-AI67 or Docket No. SBA-2026-0199.

Until SBA issues a final rule and implementation instructions, the current Table of Size Standards remains the practical starting point for checking eligibility.

If finalized, the proposal could let more growing firms access federal programs, but it could also broaden the competition for contracts and other benefits. The next major steps are the September 21 comment deadline, SBA’s review of the record and any final rule explaining which changes will take effect and when.

Sources

• Federal Register proposed rule: Small Business Size Standards
• SBA Table of Size Standards
• Regulations.gov comment docket for SBA-2026-0199

The money is not primarily structured as a direct cash grant for every individual small business. Instead, the SBA expects to make about 20 awards of up to $500,000 each to organizations that can provide accelerator programs, technical assistance, industry engagement and related services. Projects are expected to last 24 months.

Proposals were required through Grants.gov by 4 p.m. Eastern on Aug. 7. The agency has not announced the awardees or distributed the funding.

What the SCALE grants are intended to support

The competition is part of the SBA’s Supply Chain Acceleration and Logistics Enablement, or SCALE, program. The program is designed to help small firms address supply-chain constraints, improve supplier readiness and production capability, and expand participation in strategically important markets.

The official funding listing identifies up to $9 million in total program funding and about 20 expected awards, with a maximum award of $500,000. The SBA says eligible applicants include public and private entities, nonprofit organizations, educational institutions, tribal organizations, governments and other organizations capable of delivering services to small businesses in the priority supply chains.

Six priority supply-chain areas

Applicants had to focus on at least one of six areas identified by the SBA:

• Advanced manufacturing
• Biotechnology and biomanufacturing supply chains
• Defense industrial-base technologies and components
• Energy, critical materials and industrial inputs
• Food supply and agricultural systems
• Transportation, logistics and industrial infrastructure

What it means for small businesses

For a small manufacturer, agricultural supplier or logistics firm, the practical value may come through an organization that receives a SCALE award. That could include an accelerator, university, nonprofit or industry group offering help with production planning, technical gaps, workforce needs, supplier qualifications or connections to larger buyers.

Small businesses should not assume that the program provides a direct $500,000 check to each participating firm. The funding structure is intended to build support systems around companies, with awardees delivering services to businesses in the selected supply-chain fields.

The SBA has framed SCALE as part of a broader effort to strengthen domestic production and strategic supply chains. Those statements describe agency priorities; they are not guarantees that the competition will create a specific number of jobs, win contracts for participating firms or reduce prices.

What happens next

Because the Aug. 7 deadline has passed, businesses cannot apply directly through the current competition. The next steps are SBA review and award decisions.

Small businesses can monitor the SBA, Grants.gov and the federal grant listing for award announcements. They should also watch local accelerators, universities, nonprofits and industry organizations that may become SCALE partners or offer related technical-assistance programs.

Firms seeking to become suppliers, expand production or address technical and workforce barriers may benefit from building relationships with those organizations while the SBA completes its review.

Sources

• SBA: SCALE grant competition announcement
• Simpler.Grants.gov: SCALE opportunity listing
• SCALE FY26 Notice of Funding Opportunity
• ExecutiveGov: SBA SCALE proposal call

Published June 11, 2026, in the Federal Register, the proposed rule would remove the current rebuttable presumption that members of designated racial and ethnic groups are socially disadvantaged. The public-comment deadline was July 13, 2026, but the proposal remains under review and has not taken effect.

For small-business owners, the practical issue is whether a future 8(a) application would require more specific evidence of discrimination, bias and personal harm instead of relying on group membership as a presumption.

What the proposal would change

The proposed rule applies only to 8(a) eligibility for businesses owned and controlled by individuals. If finalized, an applicant of any race could seek to establish social disadvantage by showing that a government, university, corporation or related entity discriminated against or disadvantaged the applicant’s racial, ethnic or cultural group, and that the action materially harmed the applicant.

The proposed standard would become the sole test for individual social disadvantage. It would replace both the rebuttable presumption for designated groups and the current non-presumptive process that relies on an individualized social-disadvantage narrative.

The Federal Register proposal says an applicant could self-certify membership in the affected group and the material harm, but would have to submit evidence of the government or private entity’s discriminatory, biased or group-favoring action. The notice lists examples such as race-based quotas, set-asides, hiring targets and other policies that favored one racial or ethnic group over another.

In practice, a prospective applicant could need records identifying the challenged policy or conduct, showing how it affected the applicant’s group and documenting the resulting economic or professional harm. The SBA says the paperwork burden would be de minimis because applicants already provide a narrative to establish social disadvantage, although the type of evidence required would change.

Who would be covered

The proposal does not directly change eligibility standards for entity-owned 8(a) businesses owned by tribes, Alaska Native Corporations, Native Hawaiian Organizations or Community Development Corporations. Those firms are expressly outside the proposed rule’s scope.

Nor does the proposal itself automatically terminate or requalify current 8(a) participants. The Federal Register notice says the proposed rule would not affect current participants and that SBA does not currently intend to apply the new test to them at their next annual review, while asking for comments about possible reliance interests.

The SBA estimates that approximately 4,190 8(a) applicants could be affected annually, based on fiscal 2025 data. That estimate is part of the proposed rule and could change before any final regulation.

Why the SBA says it is acting

The SBA says the proposal is intended to align its regulations with constitutional requirements and the 2023 decision in Ultima Services Corp. v. U.S. Department of Agriculture. In that case, a federal district court held that the regulatory rebuttable presumption violated the Fifth Amendment’s equal-protection guarantee and barred the SBA from continuing to use it in administering the program.

The agency says a race-neutral evidence standard would address that ruling while preserving a pathway for applicants of any race who can document group-based discrimination and material harm. The legal rationale and the examples in the proposal are the SBA’s positions, not findings that the proposed rule is already in effect.

What critics are arguing

Sens. Ed Markey, D-Mass., and Mazie Hirono, D-Hawaii, have argued that the proposal goes beyond what the Ultima decision requires. In a July letter, the senators said the rule could discourage minority entrepreneurs from applying, overlook continuing barriers to contracting and capital, and give applicants too little guidance about what evidence the SBA would accept.

Their criticism is directed at the proposal’s policy and implementation choices. It does not change the rule’s current legal status: the SBA has not issued a final regulation or announced an effective date.

What small-business owners should watch

Owners considering the individually owned 8(a) program should not assume that the proposed rule has already changed eligibility. Membership in a designated racial or ethnic group remains an issue governed by the current operating framework, but the SBA’s proposal would eliminate that membership-based presumption if finalized.

Under the proposed framework, applicants of any race could potentially qualify, but they would need evidence supporting both parts of the test: group-based discrimination or disadvantage and material personal harm. Entity-owned firms in the categories identified by the SBA would remain outside the proposal’s direct scope.

The next step is the SBA’s review of comments submitted by July 13. The agency could issue a final rule, revise the proposal or withdraw it. Business owners should watch for a Federal Register final rule, SBA implementation guidance and any litigation over the eventual policy.

Sources

• Federal Register: Proposed 8(a) eligibility rule
• SBA: 8(a) Business Development reform announcement
• Federal News Network: Democrats challenge SBA 8(a) overhaul

The change could matter most to manufacturers and other capital-intensive companies that need operating cash as well as a building, production line, machinery or other long-term assets. But it does not create a universal $10 million loan or guarantee that a borrower will receive the maximum.

What changed

SBA Policy Notice 5000-879058 was published May 18 and became effective July 4. It says an outstanding 7(a) balance generally does not reduce the borrower’s available 504 capacity, subject to the notice’s specific rules.

The required order is important: The 7(a) loan must be approved first, and the 504 transaction follows through a Certified Development Company, or CDC. The SBA explained the practical effect in a July 7 announcement describing the possibility of up to $10 million in combined SBA-backed financing.

In the standard example, an eligible borrower could receive up to $5 million through an individual 7(a) loan and up to $5 million in aggregate outstanding 504 debenture exposure for standard projects. The agency’s current 7(a) program guidance continues to list $5 million as the maximum for an individual 7(a) loan.

That means the policy combines separate program capacity. It does not raise the individual 7(a) limit to $10 million.

How the two programs fit together

7(a) financing is the more flexible of the two programs. Depending on eligibility and lender approval, it can support short- and long-term working capital, equipment, real estate, expansion and other permitted business needs.

504 financing is designed for major fixed assets, including land, buildings, machinery and equipment. The policy also clarifies that a 504 project may include multiple eligible assets financed simultaneously, such as a facility and a production line, subject to the applicable debenture limits and project rules.

That division may help a company avoid forcing every cost into one financing product. For example, a manufacturer could use 7(a) proceeds for operating liquidity or lighter equipment needs while using 504 financing for a plant expansion and major production machinery. Similar planning may be relevant to construction, logistics, energy and food-production businesses with substantial fixed-asset requirements.

Why the $10 million figure has limits

The combined figure is a potential ceiling in a qualifying structure, not an automatic award. Approval remains subject to SBA eligibility standards, project requirements, affiliate rules, statutory restrictions, lender underwriting and the borrower’s ability to repay both obligations.

The policy notice sets the standard 504 limit at $5 million in aggregate outstanding debentures for a small business concern, including affiliates. It allows up to $5.5 million for each eligible small-manufacturer project and certain eligible energy projects, but those categories have additional definitions and limits.

For small manufacturers, the notice defines eligibility for the higher project limit by reference to a primary NAICS code in sectors 31, 32 or 33 and production facilities located in the United States. The higher limit does not mean every manufacturer qualifies or that a business can obtain unlimited 504 financing without regard to distinct projects, affiliates and aggregate exposure.

The actual amount available will depend on the business, the project, the assets being financed, existing obligations and the lender’s repayment analysis. Borrowers should confirm how proposed uses fit within each program before committing to an asset purchase or financing sequence.

What small businesses should prepare

• Map each planned cost to the program designed to support it.
• Identify which working-capital, expansion or equipment needs may belong in 7(a).
• Separate the facility, machinery and other long-term fixed assets proposed for 504 financing.
• Build a repayment plan that accounts for both loans, existing obligations and realistic operating cash flow.
• Discuss the required sequence with a participating 7(a) lender and a CDC before finalizing the project.
• Ask how the lender and CDC will coordinate documentation, timing, collateral and eligible costs.

The next practical test will be how lenders and CDCs apply the clarification to real projects. Small businesses considering the structure should focus on implementation details rather than assuming that the headline $10 million figure will be available in full.

Sources

• SBA Policy Notice 5000-879058
• SBA: Small Businesses Now Eligible for $10 Million in SBA Financing

Separate SBA guidance also took effect on March 1, 2026, tightening ownership eligibility. Under the updated framework, SBA requires that 100% of direct and/or indirect owners of an applicant be U.S. citizens or U.S. nationals with their principal residence in the United States, its territories, or possessions—and it removes the earlier “up to 5%” allowance.

What GAO decided—and why it changes the oversight stakes

GAO’s decision, B-338157, addressed whether SBA’s February 2026 notices must be treated as a “rule” for CRA purposes. GAO concluded that the notices meet the CRA’s definition of a rule under the Administrative Procedure Act (APA) and that no CRA exception applies.

The practical point for small businesses is not that GAO automatically invalidated SBA’s notices. Instead, the decision gives Congress a clearer CRA footing for oversight—if lawmakers choose to pursue CRA steps related to the SBA notices.

What SBA changed in the February 2026 notices (the buyer-beware basics)

GAO’s decision describes SBA notices issued in February 2026 that modified SOP 50 10, the operating guidance lenders and CDCs use for 7(a) and 504 loan processing.

According to SBA’s Policy Notice 5000-876441 (effective March 1, 2026), SBA revised SOP 50 10 8 to require that 100% of all direct and/or indirect owners of a small business applicant be U.S. citizens or U.S. nationals with their principal residence in the United States, its territories, or possessions.

SBA’s same policy notice also says it rescinded the earlier procedural notice that contained the narrow “5% ownership” framework. Further, it states that beginning with the March 1, 2026 effective date, legal permanent residents (LPRs) are not eligible to own any percentage interest in the applicant/borrower (and related entities addressed in the SOP).

The earlier “5% exception” that SBA removed

Before the March 1, 2026 tightening, SBA’s Procedural Notice 5000-872050 (effective December 19, 2025) described a narrow allowance that could permit up to 5% aggregate ownership for certain approvals.

SBA specified that the changes in the December 2025 procedural notice would apply to 7(a) and 504 applications approved on and after January 1, 2026. Under that earlier approach, the eligibility framework differed from what lenders and borrowers faced under the later March 1, 2026 update.

What main-street lenders and borrowers should watch next

For borrowers, the immediate “watch next” item is the documentation and ownership-review process. SBA’s March 1, 2026 update changes the ownership eligibility baseline—especially where LPR ownership is concerned—and it removes the prior “up to 5%” path described in the December 2025 procedural notice.

For lenders and CDCs, GAO’s CRA classification increases the chance that SBA’s February 2026 notices become an explicit focus of Congressional oversight. Put simply: when SBA changes program eligibility through policy/procedural notices, GAO is signaling that CRA review pathways may still apply.

Small business owners with mixed or complicated ownership structures should treat this as a compliance-sensitive change and coordinate early with their SBA lender (or CDC, for 504 loans) and qualified counsel to understand how the current SOP standards apply to their specific facts.

Sources

• GAO decision B-338157 (July 1, 2026): CRA applicability to SBA Feb. 2026 policy/procedural notices for 7(a) and 504 citizenship/residency updates
• SBA Policy Notice 5000-876441 (PDF): rescinds PN 5000-872050; effective March 1, 2026; LPRs not eligible to own any percentage interest