If your company brings in $100 million a year, are you a small business? Under the rules the Small Business Administration proposed on August 20, the answer in many industries would soon be yes. The agency wants to collapse nearly 1,000 industry size standards into 338, raise thresholds so sharply that an estimated 114,000-plus firms would newly count as small, and switch most industries from measuring revenue to counting heads.
This is not abstract rulemaking. If you borrow through SBA loan programs, bid on set-aside federal contracts, or compete against firms that do, the proposal redraws the line that decides who gets in the door. And the window to influence it is almost closed: public comments are due September 21, 2026 — five days from today.
What the SBA Actually Proposed
The proposal arrived as two companion publications in the Federal Register: a revised methodology white paper explaining how the SBA would calculate size standards going forward, and a proposed rule applying that methodology to set the actual thresholds. Here is what they would do:
Collapse the size standards table. Roughly 995 standards set at the six-digit NAICS industry level (978 industries plus 18 subindustry exceptions) would become 338 standards set higher up the classification tree — 276 at the four-digit industry-group level and 62 at the five-digit level. Sectors currently sliced into multiple six-digit codes with different thresholds would share one standard. The SBA's own example: ship building and boat building, which carry different employee thresholds today, would take a single standard at the broader group level.
Raise thresholds, sometimes by an order of magnitude. Engineering services would move from $25.5 million to $252 million in average annual receipts. Computer systems design and related services would jump from $34 million to $531 million. The agency also proposes not to lower any existing standard, even in the 45 industries where its own analytics would support a decrease.
Default to employee-based measurement. Where the SBA believes it has discretion, industries would move from receipts to headcount — 208 of the 338 proposed standards would be employee-based. The stated reason is stability: revenue swings, inflation, and productivity growth keep pushing firms back and forth across receipts thresholds, while headcount moves more slowly.
Remove the ceiling and set a floor. The explicit maximums come out; new minimums of 500 employees or $30.6 million in receipts go in, so every industry gets at least that. Receipts-based standards would also be adjusted for productivity growth on top of inflation for the first time, on the theory that technology and worker skills push business receipts up faster than prices alone.
Eliminate all 18 exceptions. Every subindustry carve-out in the footnotes to the size standards table would disappear — including the IT Value Added Reseller exception that many resellers have built their businesses around, the environmental remediation services exception, and the dredging standard with its requirement to perform at least 40 percent of the volume dredged with a small firm's own equipment.
The SBA estimates the changes would newly classify about 114,541 businesses as small. Of those, roughly 37,000 held federal contracts in fiscal 2025 — some 105,000 contracts worth more than $71 billion. That is the scale of the market being re-sorted.
Why This Matters Even If You Never Bid on a Contract
Size status is the key to far more than set-aside contracts. It determines eligibility for SBA 7(a) and 504 loans, Small Business Investment Company financing, Small Business Innovation Research grants, and a long tail of state and local programs that piggyback on the federal definition. A firm that graduates out of "small" loses access to all of that at once — which is why the thresholds matter to borrowers and grant-seekers who have never touched a federal procurement.
For businesses sitting just above today's lines, the proposal is potentially a windfall. Firms that outgrew their receipts standard while keeping headcount modest could become eligible again, regaining access to loan programs and set-aside competitions they aged out of years ago. Higher thresholds also give small-business joint ventures more room before affiliation rules become a problem and open space for small-to-small acquisitions that previously would have disqualified both parties.
But there is a mirror image, and small-business advocates are sounding the alarm about it. If a $200 million firm newly counts as small in your industry, it can now bid against you in competitions reserved for small businesses — bringing deeper bench strength, lower financing costs, and economies of scale you cannot match. The proposal simplifies the system, critics argue, by letting much larger companies into pools meant for genuinely small firms. Whether you land on the winning or losing side of that trade depends entirely on your NAICS code, your size, and who else swims in your lane — which is exactly why the SBA needs to hear from businesses like yours, not just trade associations and large contractors.
The Receipts-to-Employees Shift Changes Your Planning Math
The measurement change deserves its own attention because it alters everyday business decisions. Under the current receipts-based system, a familiar trap awaits growing contractors: winning a large contract pushes your five-year average receipts over the line and costs you the eligibility that made the win possible. Success literally disqualifies you. Measure by headcount instead, and revenue growth from performance stops triggering that outcome.
The flip side is that hiring and subcontracting decisions take on new weight. Headcount-based standards make your employee count — generally averaged over the preceding 24 months, with part-time and temporary workers included — the number that determines your status. Staffing up aggressively, converting contractors to employees, or absorbing another firm's workforce in an acquisition could move you across a threshold that revenue alone never would. Subcontracting strategy matters too, since affiliation rules can pull a subcontractor's employees into your count in some arrangements. If your industry converts from receipts to employees, revisit your growth plan with the new ruler in hand.
One more practical consequence: because standards would sit at the four- and five-digit level, your six-digit NAICS code may not appear as its own line in the proposed table. You roll up to the parent — codes 541512 and 541519 both fall under group 5415 and take that group's standard — and where the SBA sets a five-digit standard, it controls over the four-digit group above it. Run every code you operate under, not just your primary one.
What to Do Before September 21
Run your numbers against the proposed table this week. Pull your NAICS codes, your five-year average receipts, and your 24-month average headcount (including affiliates), then compare your current status with your status under the proposal. Model the competitive field, not just yourself: who else in your industry group becomes small, and what does that do to the next set-aside you planned to chase?
Check whether your industry changes rulers. A conversion from receipts to employees rewrites the incentives around hiring, subcontracting, and acquisitions. Know which side of that change you land on before you comment — and before you make staffing decisions this fall.
If you rely on one of the 18 exceptions, assume it goes away. Resellers under the ITVAR exception, environmental remediation firms, and dredging concerns face the most abrupt transitions. Your comment should quantify what consolidation does to your specific niche, with your own figures.
File a comment that actually counts. Comments go in at regulations.gov under Docket No. SBA-2026-0199 for the standards rule and Docket No. SBA-2026-0265 for the methodology — both close September 21, 2026. The SBA must respond to substantive comments, but volume alone moves nothing. What carries weight is NAICS-specific analysis: your own numbers, showing what the proposed standard does to a defined firm profile in a defined market. If consolidation lumps your niche together with a materially different industry, say so and show the dispersion. If a threshold would put you head-to-head with firms ten times your size, quantify it. Recommended modifications with supporting rationale beat objections without them.
Consider testifying. The SBA is holding a public forum on September 17, 2026 to take testimony on both publications, with pre-registration required. Testimony becomes part of the administrative record the agency must consider when writing the final rule. Written testimony can also be submitted by mail or email to the Office of Government Contracting and Business Development.
Do not change anything yet. This is a proposal. Current standards remain in full effect until a final rule takes effect, and nobody should be altering their SAM.gov representations based on it. But the agency has signaled clear intent to proceed, so the planning starts now.
Your Books Are the Evidence — Keep Them Ready
Whatever the final rule says, your size status will still be computed from your financial records: trailing receipts averages from your revenue history, headcount averages from your payroll records, and affiliate totals stitched together across entities under common control. Size protests and eligibility reviews turn on those numbers, and a self-certification you cannot document is a liability, not an asset.
That makes clean, consistent recordkeeping part of your contracting strategy. Keep revenue recognized the same way period after period so a five-year average means something. Keep payroll records that can reconstruct monthly headcount on demand. If you operate multiple entities, keep intercompany relationships and ownership documented so an affiliation analysis does not become an archaeological dig. When the final rule lands and you re-certify under new thresholds, the firms with audit-ready books will answer in an afternoon; everyone else will be reconstructing years of history under deadline.
Keep Your Financial Records Ready for Whatever the Final Rule Says
Whether the SBA finalizes these thresholds or scales them back, your eligibility for loans, grants, and contracts will always come down to what your books can prove. Beancount.io provides plain-text accounting that gives you complete transparency and control over your financial data — no black boxes, no vendor lock-in. Get started for free and see why developers and finance professionals are switching to plain-text accounting.
